1. More on Adverse Possession
1.1. Personal Property
O’Keeffe v. Snyder,
83 N.J. 478 (1980)
Joel H. Sterns, Trenton, for defendant-appellant Barry Snyder, d/b/a Princeton Gallery of Fine Art (Sterns, Herbert & Weinroth, Trenton, attorneys; Mark D. Schorr and William J. Bigham, Trenton, on briefs).
Thomas C. Jamieson, Jr., Trenton, for third party defendant-appellant Ulrich A. Frank (Jamieson, McCardell, Moore, Peskin & Spicer, Trenton, attorneys).
Roger A. Lowenstein, Roseland, for plaintiff-respondent (Lowenstein, Sandler, Brochin, Kohl, Fisher & Boylan, Roseland, attorneys; Roger A. Lowenstein and Lee Hilles Wertheim, Roseland, on briefs).
This is an appeal from an order of the Appellate Division granting summary judgment to plaintiff, Georgia O’Keeffe, against defendant, Barry Snyder, d/b/a Princeton Gallery of Fine Art, for replevin of three small pictures painted by O’Keeffe. In her complaint, filed in March, 1976, O’Keeffe alleged she was the owner of the paintings and that they were stolen from a New York art gallery in 1946. Snyder asserted he was a purchaser for value of the paintings, he had title by adverse possession, and O’Keeffe’s action was barred by the expiration of the six-year period of limitations provided by N.J.S.A. 2A:14-1 pertaining to an action in replevin. Snyder impleaded third party defendant, Ulrich A. Frank, from whom Snyder purchased the paintings in 1975 for $35,000.
The trial court granted summary judgment for Snyder on the ground that O’Keeffe’s action was barred because it was not commenced within six years of the alleged theft. The Appellate Division reversed and entered judgment for O’Keeffe. A majority of that court concluded that the paintings were stolen, the defenses of expiration of the statute of limitations and title by adverse possession were identical, and Snyder had not proved the elements of adverse possession. Consequently, the majority ruled that O’Keeffe could still enforce her right to possession of the paintings.
… . We reverse and remand the matter for a plenary hearing in accordance with this opinion.
The record, limited to pleadings, affidavits, answers to interrogatories, and depositions, is fraught with factual conflict. Apart from the creation of the paintings by O’Keeffe and their discovery in Snyder’s gallery in 1976, the parties agree on little else.
O’Keeffe contended the paintings were stolen in 1946 from a gallery, An American Place. The gallery was operated by her late husband, the famous photographer Alfred Stieglitz.
… . . In 1946, Stieglitz arranged an exhibit which included an O’Keeffe painting, identified as Cliffs. According to O’Keeffe, one day in March, 1946, she and Stieglitz discovered Cliffs was missing from the wall of the exhibit. O’Keeffe estimates the value of the painting at the time of the alleged theft to have been about $150.
About two weeks later, O’Keeffe noticed that two other paintings, Seaweed and Fragments, were missing from a storage room at An American Place. She did not tell anyone, even Stieglitz, about the missing paintings, since she did not want to upset him.
Before the date when O’Keeffe discovered the disappearance of Seaweed, she had already sold it (apparently for a string of amber beads) to a Mrs. Weiner, now deceased. Following the grant of the motion for summary judgment by the trial court in favor of Snyder, O’Keeffe submitted a release from the legatees of Mrs. Weiner purportedly assigning to O’Keeffe their interest in the sale.
O’Keeffe testified on depositions that at about the same time as the disappearance of her paintings, 12 or 13 miniature paintings by Marin also were stolen from An American Place. According to O’Keeffe, a man named Estrick took the Marin paintings and “maybe a few other things.” Estrick distributed the Marin paintings to members of the theater world who, when confronted by Stieglitz, returned them. However, neither Stieglitz nor O’Keeffe confronted Estrick with the loss of any of the O’Keeffe paintings.
There was no evidence of a break and entry at An American Place on the dates when O’Keeffe discovered the disappearance of her paintings. Neither Stieglitz nor O’Keeffe reported them missing to the New York Police Department or any other law enforcement agency. Apparently the paintings were uninsured, and O’Keeffe did not seek reimbursement from an insurance company. Similarly, neither O’Keeffe nor Stieglitz advertised the loss of the paintings in Art News or any other publication. Nonetheless, they discussed it with associates in the art world and later O’Keeffe mentioned the loss to the director of the Art Institute of Chicago, but she did not ask him to do anything because “it wouldn’t have been my way.” O’Keeffe does not contend that Frank or Snyder had actual knowledge of the alleged theft.
Stieglitz died in the summer of 1946, and O’Keeffe explains she did not pursue her efforts to locate the paintings because she was settling his estate. In 1947, she retained the services of Doris Bry to help settle the estate. Bry urged O’Keeffe to report the loss of the paintings, but O’Keeffe declined because “they never got anything back by reporting it.” Finally, in 1972, O’Keeffe authorized Bry to report the theft to the Art Dealers Association of America, Inc., which maintains for its members a registry of stolen paintings. The record does not indicate whether such a registry existed at the time the paintings disappeared.
In September, 1975, O’Keeffe learned that the paintings were in the Andrew Crispo Gallery in New York on consignment from Bernard Danenberg Galleries. On February 11, 1976, O’Keeffe discovered that Ulrich A. Frank had sold the paintings to Barry Snyder, d/b/a Princeton Gallery of Fine Art. She demanded their return and, following Snyder’s refusal, instituted this action for replevin.
Frank traces his possession of the paintings to his father, Dr. Frank, who died in 1968. He claims there is a family relationship by marriage between his family and the Stieglitz family, a contention that O’Keeffe disputes. Frank does not know how his father acquired the paintings, but he recalls seeing them in his father’s apartment in New Hampshire as early as 1941-1943, a period that precedes the alleged theft. Consequently, Frank’s factual contentions are inconsistent with O’Keeffe’s allegation of theft. Until 1965, Dr. Frank occasionally lent the paintings to Ulrich Frank. In 1965, Dr. and Mrs. Frank formally gave the paintings to Ulrich Frank, who kept them in his residences in Yardley, Pennsylvania and Princeton, New Jersey. In 1968, he exhibited anonymously Cliffs and Fragments in a one day art show in the Jewish Community Center in Trenton. All of these events precede O’Keeffe’s listing of the paintings as stolen with the Art Dealers Association of America, Inc. in 1972.
Frank claims continuous possession of the paintings through his father for over thirty years and admits selling the paintings to Snyder. Snyder and Frank do not trace their provenance, or history of possession of the paintings, back to O’Keeffe.
As indicated, Snyder moved for summary judgment on the theory that O’Keeffe’s action was barred by the statute of limitations and title had vested in Frank by adverse possession. For purposes of his motion, Snyder conceded that the paintings had been stolen. On her cross motion, O’Keeffe urged that the paintings were stolen, the statute of limitations had not run, and title to the paintings remained in her.
[The Court held that there were disputed issues of material fact regarding, among other things, whether the paintings were stolen. The case was, therefore, remanded for trial.]
On the limited record before us, we cannot determine now who has title to the paintings. That determination will depend on the evidence adduced at trial. Nonetheless, we believe it may aid the trial court and the parties to resolve questions of law that may become relevant at trial.
Our decision begins with the principle that, generally speaking, if the paintings were stolen, the thief acquired no title and could not transfer good title to others regardless of their good faith and ignorance of the theft. Proof of theft would advance O’Keeffe’s right to possession of the paintings absent other considerations such as expiration of the statute of limitations.
Another issue that may become relevant at trial is whether Frank or his father acquired a “voidable title” to the paintings under N.J.S.A. 12A:2-403(1). That section, part of the Uniform Commercial Code (U.C.C.), does not change the basic principle that a mere possessor cannot transfer good title. Nonetheless, the U.C.C. permits a person with voidable title to transfer good title to a good faith purchaser for value in certain circumstances. N.J.S.A. 12A:2-403(1). If the facts developed at trial merit application of that section, then Frank may have transferred good title to Snyder, thereby providing a defense to O’Keeffe’s action. No party on this appeal has urged factual or legal contentions concerning the applicability of the U.C.C. Consequently, a more complete discussion of the U.C.C. would be premature, particularly in light of our decision to remand the matter for trial.
On this appeal, the critical legal question is when O’Keeffe’s cause of action accrued. The fulcrum on which the outcome turns is the statute of limitations in N.J.S.A. 2A:14-1, which provides that an action for replevin of goods or chattels must be commenced within six years after the accrual of the cause of action.
The trial court found that O’Keeffe’s cause of action accrued on the date of the alleged theft, March, 1946, and concluded that her action was barred. The Appellate Division found that an action might have accrued more than six years before the date of suit if possession by the defendant or his predecessors satisfied the elements of adverse possession. As indicated, the Appellate Division concluded that Snyder had not established those elements and that the O’Keeffe action was not barred by the statute of limitations.
Since the alleged theft occurred in New York, a preliminary question is whether the statute of limitations of New York or New Jersey applies. The New York statute, N.Y. Civ. Prac. Law § 214 (McKinney), has been interpreted so that the statute of limitations on a cause of action for replevin does not begin to run until after refusal upon demand for the return of the goods. Here, O’Keeffe demanded return of the paintings in February, 1976. If the New York statute applied, her action would have been commenced within the period of limitations.
[The Court concluded, based on a balance of interests, that New Jersey’s statute would likely apply but left further consideration and factfinding to the trial court.]
On the assumption that New Jersey law will apply, we shall consider significant questions raised about the interpretation of N.J.S.A. 2A:14-1. The purpose of a statute of limitations is to “stimulate to activity and punish negligence” and “promote repose by giving security and stability to human affairs.” A statute of limitations achieves those purposes by barring a cause of action after the statutory period. In certain instances, this Court has ruled that the literal language of a statute of limitations should yield to other considerations.
To avoid harsh results from the mechanical application of the statute, the courts have developed a concept known as the discovery rule. The discovery rule provides that, in an appropriate case, a cause of action will not accrue until the injured party discovers, or by exercise of reasonable diligence and intelligence should have discovered, facts which form the basis of a cause of action. The rule is essentially a principle of equity, the purpose of which is to mitigate unjust results that otherwise might flow from strict adherence to a rule of law.
This Court first announced the discovery rule in [Fernandi v. Strully, 35 N.J. 434 (1961)]. In Fernandi, a wing nut was left in a patient’s abdomen following surgery and was not discovered for three years. The majority held that fairness and justice mandated that the statute of limitations should not have commenced running until the plaintiff knew or had reason to know of the presence of the foreign object in her body. The discovery rule has since been extended to other areas of medical malpractice.
Increasing acceptance of the principle of the discovery rule has extended the doctrine to contexts unrelated to medical malpractice. [The Court cites cases dealing with negligence in conduit installation, surveying, union representation, and defective products.]
The statute of limitations before us, N.J.S.A. 2A:14-1, has been held subject to the discovery rule in an action for wrongful detention of shares of stock. Federal Insurance Co. v. Hausler, 108 N.J.Super. 421, 426, 261 A.2d 671 (App. Div. 1970). In Hausler, the defendant purchased preferred stock of a corporation through a stockbroker. On March 9, 1961, the broker erroneously sent to the customer a certificate for common stock of greater value. The broker discovered the error in December, 1961, but did not learn the identity of the customer’s account in which the error was made until November, 1962. Defendants refused to exchange the common stock for the preferred stock. Plaintiff, a bonding company subrogated to the broker’s rights, instituted an action on July 2, 1968, within six years of the date on which the broker learned the identity of the defendants as the customers who wrongfully received the common stock, but more than six years after the broker knew it had a cause of action. Judge Goldmann, writing for a unanimous court, reversed the grant of a summary judgment for defendants and remanded the matter for a full trial to determine whether (1) the broker knew or reasonably should have known of the error and the defendants’ identity in December, 1961 and (2) defendants knew of the mistake from the beginning and fraudulently concealed it. Overruling the trial court which had concluded “(t)his is not a good case in which to apply the discovery rule,” Judge Goldmann found the discovery rule applicable.
Similarly, we conclude that the discovery rule applies to an action for replevin of a painting under N.J.S.A. 2A:14-1. O’Keeffe’s cause of action accrued when she first knew, or reasonably should have known through the exercise of due diligence, of the cause of action, including the identity of the possessor of the paintings. See N. Ward, Adverse Possession of Loaned or Stolen Objects: Is Possession Still 9/10 ths of the law?, published in Legal Problems of Museum Administration (ALI-ABA 1980) at 89-90.
In determining whether O’Keeffe is entitled to the benefit of the discovery rule, the trial court should consider, among others, the following issues: (1) whether O’Keeffe used due diligence to recover the paintings at the time of the alleged theft and thereafter; (2) whether at the time of the alleged theft there was an effective method, other than talking to her colleagues, for O’Keeffe to alert the art world; and (3) whether registering paintings with the Art Dealers Association of America, Inc. or any other organization would put a reasonably prudent purchaser of art on constructive notice that someone other than the possessor was the true owner.
The acquisition of title to real and personal property by adverse possession is based on the expiration of a statute of limitations. Adverse possession does not create title by prescription apart from the statute of limitations. Walsh, Title by Adverse Possession, 17 N.Y.U.L.Q.Rev. 44, 82 (1939) (Walsh); see Developments in the Law Statutes of Limitations, 63 Harv.L.Rev. 1177 (1950) (Developments).
To establish title by adverse possession to chattels, the rule of law has been that the possession must be hostile, actual, visible, exclusive, and continuous. Redmond v. New Jersey Historical Society, 132 N.J.Eq. 464, 474, 28A.2d 189 (E. & A. 1942). Redmond involved a portrait of Captain James Lawrence by Gilbert Stuart, which was bequeathed by its owner to her son with a provision that if he should die leaving no descendants, it should go to the New Jersey Historical Society. The owner died in 1887, when her son was 14, and her executors delivered the painting to the Historical Society. The painting remained in the possession of the Historical Society for over 50 years, until 1938, when the son died and his children, the legatees under his will, demanded its return. The Historical Society refused, and the legatees instituted a replevin action.
The Historical Society argued that the applicable statute of limitations, the predecessor of N.J.S.A. 2A:14-1, had run and that plaintiffs’ action was barred. The Court of Errors and Appeals held that the doctrine of adverse possession applied to chattels as well as to real property, Redmond, supra, 132 N.J.Eq. at 473, 28 A.2d 189, and that the statute of limitations would not begin to run against the true owner until possession became adverse. Id. at 475, 28 A.2d 189. The Court found that the Historical Society had done nothing inconsistent with the theory that the painting was a “voluntary bailment or gratuitous loan” and had “utterly failed to prove that its possession of the portrait was ‘adversary,’ ‘hostile.’” The Court found further that the Historical Society had not asserted ownership until 1938, when it refused to deliver the painting to plaintiff, and that the statute did not begin to run until that date. Consequently, the Court ordered the painting to be returned to plaintiffs.
The only other New Jersey case applying adverse possession to chattels is Joseph v. Lesnevich, 56 N.J.Super. 340, 153 A.2d 349 (App. Div. 1949). In Lesnevich, several negotiable bearer bonds were stolen from plaintiff in 1951. In October, 1951, Lesnevich received an envelope containing the bonds. On October 21, 1951, Lesnevich and his business partner pledged the bonds with a credit company. They failed to pay the loan secured by the bonds and requested the credit company to sell the bonds to pay the loan. On August 1, 1952, the president of the credit company purchased the bonds and sold them to his son. In 1958, within one day of the expiration of six years from the date of the purchase, the owner of the bonds sued the credit company and its president, among others, for conversion of the bonds. The Appellate Division found that the credit company and its president held the bonds “as openly and notoriously as the nature of the property would permit.” Lesnevich, supra, 56 N.J.Super. at 355, 153 A.2d at 357. The pledge of the bonds with the credit company was considered to be open possession.
As Lesnevich demonstrates, there is an inherent problem with many kinds of personal property that will raise questions whether their possession has been open, visible, and notorious. In Lesnevich, the court strained to conclude that in holding bonds as collateral, a credit company satisfied the requirement of open, visible, and notorious possession.
Other problems with the requirement of visible, open, and notorious possession readily come to mind. For example, if jewelry is stolen from a municipality in one county in New Jersey, it is unlikely that the owner would learn that someone is openly wearing that jewelry in another county or even in the same municipality. Open and visible possession of personal property, such as jewelry, may not be sufficient to put the original owner on actual or constructive notice of the identity of the possessor.
The problem is even more acute with works of art. Like many kinds of personal property, works of art are readily moved and easily concealed. O’Keeffe argues that nothing short of public display should be sufficient to alert the true owner and start the statute running. Although there is merit in that contention from the perspective of the original owner, the effect is to impose a heavy burden on the purchasers of paintings who wish to enjoy the paintings in the privacy of their homes.
In the present case, the trial court and Appellate Division concluded that the paintings, which allegedly had been kept in the private residences of the Frank family, had not been held visibly, openly, and notoriously. Notwithstanding that conclusion, the trial court ruled that the statute of limitations began to run at the time of the theft and had expired before the commencement of suit. The Appellate Division determined it was bound by the rules in Redmond and reversed the trial court on the theory that the defenses of adverse possession and expiration of the statute of limitations were identical. Nonetheless, for different reasons, the majority and dissenting judges in the Appellate Division acknowledged deficiencies in identifying the statute of limitations with adverse possession. The majority stated that, as a practical matter, requiring compliance with adverse possession would preclude barring stale claims and acquiring title to personal property. The dissenting judge feared that identifying the statutes of limitations with adverse possession would lead to a “handbook for larceny.” The divergent conclusions of the lower courts suggest that the doctrine of adverse possession no longer provides a fair and reasonable means of resolving this kind of dispute.
The problem is serious. According to an affidavit submitted in this matter by the president of the International Foundation for Art Research, there has been an “explosion in art thefts” and there is a “worldwide phenomenon of art theft which has reached epidemic proportions.”
The limited record before us provides a brief glimpse into the arcane world of sales of art, where paintings worth vast sums of money sometimes are bought without inquiry about their provenance. There does not appear to be a reasonably available method for an owner of art to record the ownership or theft of paintings. Similarly, there are no reasonable means readily available to a purchaser to ascertain the provenance of a painting. It may be time for the art world to establish a means by which a good faith purchaser may reasonably obtain the provenance of a painting. An efficient registry of original works of art might better serve the interests of artists, owners of art, and bona fide purchasers than the law of adverse possession with all of its uncertainties. Although we cannot mandate the initiation of a registration system, we can develop a rule for the commencement and running of the statute of limitations that is more responsive to the needs of the art world than the doctrine of adverse possession.
We are persuaded that the introduction of equitable considerations through the discovery rule provides a more satisfactory response than the doctrine of adverse possession. The discovery rule shifts the emphasis from the conduct of the possessor to the conduct of the owner. The focus of the inquiry will no longer be whether the possessor has met the tests of adverse possession, but whether the owner has acted with due diligence in pursuing his or her personal property.
For example, under the discovery rule, if an artist diligently seeks the recovery of a lost or stolen painting, but cannot find it or discover the identity of the possessor, the statute of limitations will not begin to run. The rule permits an artist who uses reasonable efforts to report, investigate, and recover a painting to preserve the rights of title and possession.
Properly interpreted, the discovery rule becomes a vehicle for transporting equitable considerations into the statute of limitations for replevin, N.J.S.A. 2A:14-1. In determining whether the discovery rule should apply, a court should identify, evaluate, and weigh the equitable claims of all parties. If a chattel is concealed from the true owner, fairness compels tolling the statute during the period of concealment. That conclusion is consistent with tolling the statute of limitations in a medical malpractice action where the physician is guilty of fraudulent concealment.
It is consistent also with the law of replevin as it has developed apart from the discovery rule. In an action for replevin, the period of limitations ordinarily will run against the owner of lost or stolen property from the time of the wrongful taking, absent fraud or concealment. Where the chattel is fraudulently concealed, the general rule is that the statute is tolled.
A purchaser from a private party would be well-advised to inquire whether a work of art has been reported as lost or stolen. However, a bona fide purchaser who purchases in the ordinary course of business a painting entrusted to an art dealer should be able to acquire good title against the true owner. Under the U.C.C. entrusting possession of goods to a merchant who deals in that kind of goods gives the merchant the power to transfer all the rights of the entruster to a buyer in the ordinary course of business. In a transaction under that statute, a merchant may vest good title in the buyer as against the original owner. The interplay between the statute of limitations as modified by the discovery rule and the U.C.C. should encourage good faith purchases from legitimate art dealers and discourage trafficking in stolen art without frustrating an artist’s ability to recover stolen art works.
The discovery rule will fulfill the purposes of a statute of limitations and accord greater protection to the innocent owner of personal property whose goods are lost or stolen. Accordingly, we overrule Redmond v. New Jersey Historical Society, supra, and Joseph v. Lesnevich, supra, to the extent that they hold that the doctrine of adverse possession applies to chattels.
By diligently pursuing their goods, owners may prevent the statute of limitations from running. The meaning of due diligence will vary with the facts of each case, including the nature and value of the personal property. For example, with respect to jewelry of moderate value, it may be sufficient if the owner reports the theft to the police. With respect to art work of greater value, it may be reasonable to expect an owner to do more. In practice, our ruling should contribute to more careful practices concerning the purchase of art.
The considerations are different with real estate, and there is no reason to disturb the application of the doctrine of adverse possession to real estate. Real estate is fixed and cannot be moved or concealed. The owner of real property knows or should know where his property is located and reasonably can be expected to be aware of open, notorious, visible, hostile, continuous acts of possession on it.
Our ruling not only changes the requirements for acquiring title to personal property after an alleged unlawful taking, but also shifts the burden of proof at trial. Under the doctrine of adverse possession, the burden is on the possessor to prove the elements of adverse possession. Under the discovery rule, the burden is on the owner as the one seeking the benefit of the rule to establish facts that would justify deferring the beginning of the period of limitations.
[The Court then held that the running of the statute of limitations not only cuts of the original owner’s replevin remedy but also vests title in the possessor.] In the past, adverse possession has described the nature of the conduct that will vest title of a chattel at the end of the statutory period. Our adoption of the discovery rule does not change the conclusion that at the end of the statutory period title will vest in the possessor.
We next consider the effect of transfers of a chattel from one possessor to another during the period of limitation under the discovery rule. Under the discovery rule, the statute of limitations on an action for replevin begins to run when the owner knows or reasonably should know of his cause of action and the identity of the possessor of the chattel. Subsequent transfers of the chattel are part of the continuous dispossession of the chattel from the original owner. The important point is not that there has been a substitution of possessors, but that there has been a continuous dispossession of the former owner.
Professor Ballantine explains:
Where the same claim of title has been consistently asserted for the statutory period by persons in privity with each other, there is the same reason to quiet and establish the title as where one person has held. The same flag has been kept flying for the whole period. It is the same ouster and disseisin. If the statute runs, it quiets a title which has been consistently asserted and exercised as against the true owner, and the possession of the prior holder justly enures to the benefit of the last.
(H. Ballantine, Title by Adverse Possession, 32 Harv.L.Rev. 135, 158 (1919))
For the purpose of evaluating the due diligence of an owner, the dispossession of his chattel is a continuum not susceptible to separation into distinct acts. Nonetheless, subsequent transfers of the chattel may affect the degree of difficulty encountered by a diligent owner seeking to recover his goods. To that extent, subsequent transfers and their potential for frustrating diligence are relevant in applying the discovery rule. An owner who diligently seeks his chattel should be entitled to the benefit of the discovery rule although it may have passed through many hands. Conversely an owner who sleeps on his rights may be denied the benefit of the discovery rule although the chattel may have been possessed by only one person.
We reject the alternative of treating subsequent transfers of a chattel as separate acts of conversion that would start the statute of limitations running anew. At common law, apart from the statute of limitations, a subsequent transfer of a converted chattel was considered to be a separate act of conversion. In his dissent, Justice Handler seeks to extend the rule so that it would apply even if the period of limitations had expired before the subsequent transfer. Nonetheless, the dissent does not cite any authority that supports the position that the statute of limitations should run anew on an act of conversion already barred by the statute of limitations. Adoption of that alternative would tend to undermine the purpose of the statute in quieting titles and protecting against stale claims.
The majority and better view is to permit tacking, the accumulation of consecutive periods of possession by parties in privity with each other.
As explained by Professor Walsh:
The doctrine of tacking applies as in corresponding cases of successive adverse possessions of land where privity exists between such possessors. Uncertainty is created by cases which hold that each successive purchaser is subject to a new cause of action against which the statute begins to run from that time, in this way indefinitely extending the time when the title will be quieted by operation of the statute. It should be entirely clear that the purposes of statutes of limitation are the same whether they relate to land or chattels, and therefore the same reasons exist for tacking successive possessions as the prevailing cases hold. Nevertheless, under the cases, new actions in conversion arise against successive purchases of the converted property, and there is strong reason back of the argument that the statute runs anew against each succeeding cause of action. No doubt the prevailing rule recognizing privity in these cases may be based upon the argument that the possessory title is transferred on each successive sale of the converted chattel, subject to the owner’s action to recover the property, and the action of replevin which is his proprietory action, continues in effect against succeeding possessors so that the statute bars the action after the successive possessions amount to the statutory period.
(Walsh, supra at 83-84)
In New Jersey tacking is firmly embedded in the law of real property. The rule has been applied also to personal property… . .
Treating subsequent transfers as separate acts of conversion could lead to absurd results. As explained by Dean Ames:
The decisions in the case of chattels are few. As a matter of principle, it is submitted this rule of tacking is as applicable to chattels as to land. A denial of the right to tack would, furthermore, lead to this result. If a converter were to sell the chattel, five years after its conversion, to one ignorant of the seller’s tort, the disposed owner’s right to recover the chattel from the purchaser would continue five years longer than his right to recover from the converter would have lasted if there had been no sale. In other words, an innocent purchaser from a wrong-doer would be in a worse position than the wrong-doer himself, a conclusion as shocking in point of justice as it would be anomalous in law.
It is more sensible to recognize that on expiration of the period of limitations, title passes from the former owner by operation of the statute. Needless uncertainty would result from starting the statute running anew merely because of a subsequent transfer. It is not necessary to strain equitable principles, as suggested by the dissent, to arrive at a just and reasonable determination of the rights of the parties. The discovery rule permits an equitable accommodation of the rights of the parties without establishing a rule of law fraught with uncertainty.
We recognize the possible relevancy of claims of common law and statutory copyright and related questions of infringement… . . For present purposes, it is sufficient to note that there are valuable rights in a work of art, apart from the right to title and possession; such as, the rights of reproduction, distribution, and display. Those rights, assembled under the rubric of a copyright, are not involved in this appeal.
We reverse the judgment of the Appellate Division in favor of O’Keeffe and remand the matter for trial in accordance with this opinion.
Sullivan, J.., dissenting.
[Justice Sullivan believed that the uncontested facts were sufficient to grant summary judgment to O’Keeffe but did not dissent from the majority’s legal holdings.]
Handler, J., dissenting.
The Court today rules that if a work of art has been stolen from an artist, the artist’s right to recover his or her work from a subsequent possessor would be barred by the statute of limitations if the action were not brought within six years after the original theft. This can happen even though the artist may have been totally innocent and wholly ignorant of the identity of the thief or of any intervening receivers or possessors of the stolen art. The Court would grudgingly grant some measure of relief from this horrendous result and allow the artist to bring suit provided he or she can sustain the burden of proving “due diligence” in earlier attempting to retrieve the stolen artwork. No similar duty of diligence or vigilance, however, is placed upon the subsequent receiver or possessor, who, innocently or not, has actually trafficked in the stolen art. Despite ritualistic disavowals, the Court’s holding does little to discourage art thievery. Rather, by making it relatively more easy for the receiver or possessor of an artwork with a “checkered background” to gain security and title than for the artist or true owner to reacquire it, it seems as though the Court surely will stimulate and legitimatize art thievery.
I believe that there is a much sounder approach in this sort of case than one that requires the parties to become enmeshed in duplicate or cumulative hearings that focus on the essentially collateral issues of the statute of limitations and its possible tolling by an extended application of the discovery doctrine. The better approach, I would suggest, is one that enables the parties to get to the merits of the controversy. It would recognize an artist’s or owner’s right to assert a claim against a newly-revealed receiver or possessor of stolen art as well as the correlative right of such a possessor to assert all equitable and legal defenses. This would enable the parties to concentrate directly upon entitlement to the artwork rather than entitlement to bring a lawsuit. By dealing with the merits of the claims instead of the right to sue, such an approach would be more conducive to reconciling the demands for individual justice with societal needs to discourage art thievery. In addition, such a rule would comport more closely with traditional common law values emphasizing the paramountcy of the rights of a true owner of chattels as against others whose possession is derived from theft. Simultaneously, it would acknowledge that the claims of the true owner as against subsequent converters may in appropriate circumstances be counterbalanced by equitable considerations.
I therefore dissent.
By virtue of cross-motions for summary judgment, the posture of the case as it comes to us is that the paintings were stolen from their true owner, plaintiff O’Keeffe, and that defendant Snyder acted in good faith in purchasing the paintings. Hence, we are presented for purposes of this appeal with the classic confrontation between a true owner of property and a subsequent bona fide purchaser for value, each of whom is relatively innocent and each of whom has been victimized by a thief. The true owner here is the artist who created the paintings, and she seeks to recover them through an action for replevin.
An action brought for replevin is a proper means for an owner to regain possession of chattels lost through conversion. The statute of limitations applicable to replevin actions is six years. N.J.S.A. 2A:14-1. A fundamental miscalculation by the majority, however, is its assumption that this six-year limitations statute is applicable to O’Keeffe’s claims. The statute of limitations defense was raised by defendant Snyder, but it is not available here because Snyder’s acts of conversion his purchase of the paintings from third-party defendant Frank and his refusal to return them to plaintiff O’Keeffe upon demand constituted independent tortious acts each of which occurred well within six years of the commencement of plaintiff’s lawsuit. Hence, there is no reason not to permit O’Keeffe’s lawsuit and allow the parties to proceed to the heart of the controversy.
In averting a direct confrontation with the merits of the dispute, the majority ignores some rather fundamental law. It rejects the doctrine that the acquisition of a stolen chattel, or a refusal to return it upon demand, itself constitutes a tortious conversion as against the true owner.
The holding of the majority, which involves a convoluted rendition of the law of statutes of limitations and adverse possession, in my respectful opinion, not only espouses an erroneous perception of the proper public policy to be achieved, but is actually unneeded even to secure the values endorsed by the Court. There is no reason why the concerns of the majority cannot be reasonably and fully accommodated by traditional doctrines that would, in a case such as this, lead us to a thorough consideration and careful balancing of all the equities as they bear directly upon the merits of the controversy.
It is the general rule that “a bona fide purchaser of personal property taken tortiously or wrongfully, as by trespass or theft, does not acquire a title good against the true owner.” … .
This rule is not a recent development. As noted by Judge Fritz in his dissenting opinion below, it has a long and distinguished history and was recognized by Lord Blackstone as a fundamental principle of English law with respect to chattels or personal property. This basic rule as to nonpassage of title to stolen personalty, viz, “(i)f a person steal (sic) goods and sell (sic) them, the title is not transferred, but remains in the original owner, and he may reclaim them,” was adopted in this country. Early cases in the United States followed this rule that good title could not be acquired from a thief, even by a bona fide purchaser.
It follows from this well-established principle that, generally, as between the true owner who has lost personal property through theft and a subsequent good faith purchaser for value, the former is entitled to the goods over the latter. Title remains in the true owner rather than flowing to the bona fide purchaser when “‘the wrongdoer sells the chattel to (such) innocent purchaser … because the wrongdoer had (no title) to give.’”
These basic tenets are fully applicable to creative works of art and govern ownership claims in the case of the theft or wrongful appropriation of artistic creations such as those involved in this case.
Consequently, if we were to view this record as presenting only the undisputed fact that the paintings were stolen and could thus not be validly transferred thereafter to Snyder as a bona fide purchaser, plaintiff O’Keeffe would clearly be entitled to prevail. And, in that posture, I would subscribe to the result urged in the dissenting opinion of Justice Sullivan, namely, a reversal and entry of judgment in favor of plaintiff. Under all of the circumstances, however, I do not believe that such a disposition would be appropriate and would instead counsel a remand, albeit with a focus and under guidelines very different from those expressed in the majority opinion.
“As a general rule, a defendant in a replevin action may interpose any defense which questions the plaintiff’s title or right to possession, or upholds his own taking or unlawful detention.” While the fundamental principle is that a wrongdoer cannot, as against the true owner, convey good title even to a bona fide purchaser, that precept is not absolute. Some exceptions to this common law rule are derived from judicial rulings, others, from statutes. Dobbs, supra, § 4.7 at 282, 286; N.J.S.A. 12A:2-403(2) (U.C.C. s 2-403(2)) (U.C.C. codifies the common law notion of voidable or equitable title where goods have been “entrusted” by the owner “to a merchant who deals in goods of that kind”).
Aside from specialized defenses peculiar to sales transactions, there are also general equitable defenses such as laches, unclean hands, estoppel or mistake cognizable in equity actions or in other actions in which such defenses may be raised. Notwithstanding in this case a failure to denominate each and every equitable defense which might be available to him, defendant Snyder has adequately invoked the defenses which would be germane in addressing plaintiff’s claim for the return of the paintings… . .
Equitable considerations have special pertinency in the instant proceedings. They appropriately require the fullest exposure of all facets of the controversy: the uniqueness of the chattels paintings created by a renowned artist whose artworks have in general grown greatly in value; the theft or mysterious disappearance of these paintings several decades ago; the subsequent possession and enjoyment of the paintings by the Frank family; Frank’s subsequent attempts to sell the paintings, and their eventual acquisition by Snyder; the experience and status of Snyder in the art world, and whether he sufficiently investigated the provenance of the O’Keeffe paintings and acted with commensurate due care and reasonable prudence when he purchased them.1 The difficulties caused by the lengthy interim between the original disappearance of the paintings and their ultimate surfacing in Snyder’s gallery also has a definite bearing upon the equities in this case.2 These considerations, I believe, should be given direct application as constituent elements of the primary claims and the affirmative defenses of the parties rather than be given at most, as required by the majority opinion, oblique application as an aspect of the discovery rule relevant only as to whether O’Keeffe is entitled to assert a claim for the stolen paintings.
I am mindful that the majority is concerned with the importance of the policy of repose and the discouragement of stale claims. At times, however, these policies must yield to other equally important policies. The majority has in this case gone well beyond a simple and understandable desire for quietude in litigation. It has actually placed the entire burden of proof as to the absence of comparative fault upon the original owner-artist, albeit in the sheep’s clothing of the discovery rule… . .
- Authority relied on here by the majority recognizes the responsibilities of experienced and knowledgeable persons in the art world, viz:
If the object is a work of a living artist(,) it may be that no one can be an innocent purchaser from a seller who lacks a provenance without at least calling the artist.” Ward, Adverse Possession of Loaned and Stolen Objects: Is Possession Still 9/10 ths of the Law?, in Legal Problems of Museum Administration 83, 96 (ALI-ABA 1980). Moreover, “(a)s experts(,) the court will expect (museums) to be more familiar with how to go about this (checking the “usual sources” to see if the work of art is stolen) than the average innocent purchaser.
- There is no compelling reason why courts or parties should suffer the “Ames anomaly” referred to by the majority in support of its thesis. Ames, The Disseisin of Chattels, 3 Harv.L.Rev. 313, 323 (1890). Ante at 876. To the extent that it appears that O’Keeffe’s claims against any person in possession prior to Snyder would have been barred under the statute of limitations, this factor would constitute a potent, if not dispositive, equity in favor of Snyder.
Pile v. Pedrick,
31 A. 646 (Penn. 1895).
John Sparhawk, Jr., and Melick & Potter, for appellants.
E. H. Hanson and J. M. Pile, for appellees.
The learned judge of the court below was right in holding that the wall in controversy was not a party wall. It was not intended to be. The defendants were building a factory, and, under the advice of their architect, decided to build within their own lines, in order to avoid the danger of injury to others from vibration which might result from the use of their machinery. They called upon the district surveyor to locate their line, and built within it, as so ascertained. Subsequent surveys by city surveyors have determined that the line was not accurately located at first, but was about 1 1/2 inches over on the plaintiffs’. This leaves the ends of the stones used in the foundation wall projecting into the plaintiffs’ lands, below the surface, 1 3/8 inches. This unintentional intrusion into the plaintiffs’ close is the narrow foundation on which this bill in equity rests. The wall resting on the stone foundation is conceded to be within the defendants’ line. The defendants offered, nevertheless, to make it a party wall, by agreement, and give to plaintiffs the free use of it, as such, on condition that the windows on the third and fourth floors should remain open until the plaintiffs should desire to use the wall. This offer was declined. The trespass was then to be remedied in one of two ways: It could be treated, with the plaintiffs’ consent, as a permanent trespass, and compensated for in damages, or the defendants could be compelled to remove the offending ends of the stones to the other side of the line. The plaintiffs insisted upon the latter course, and the court below has, by its decree, ordered that this should be done. The defendants then sought permission to go on the plaintiffs’ side of the line and chip off the projecting ends, offering to pay for all inconvenience or injury the plaintiffs or their tenants might suffer by their so doing. This they refused. Nothing remained but to take down and rebuild the entire wall from the defendants’ side, and with their building resting on it. This the decree requires, but in view of the course of the litigation the learned judge divided the costs. This is the chief ground of complaint on this appeal. Costs are not of course, in equity. They may be given or withheld as equity and good conscience require. It often happens that a chancellor is constrained to enforce a legal right under circumstances that involve hardship to the defendant, and in such cases it is, as it should be, common to dispose of the costs upon a consideration of all the circumstances, and the position and conduct of the parties. The costs in this case were within the power of the chancellor. They were disposed of in the exercise of his official discretion, and we see no reason to doubt that they were disposed of properly. The decree is affirmed; the costs of this appeal to be paid by the appellants.
Golden Press, Inc. v. Rylands,
235 P.2d 592 (Colo. 1951).
Arthur A. Brooks, Jr., Lee W. Kennedy, Denver, for plaintiff in error.
Howard Roepnack, Robert J. Sullivan, Denver, for defendants in error.
Plaintiffs Rylands and Reid owned a parcel of land fronting on West Colfax Avenue, Jefferson County, upon which were located their residence and garage and some rental cottages. Defendant Golden Press, Inc., constructed a one-story brick and cinder block business building on its property which adjoined plaintiffs’ property on the east. According to plaintiffs’ survey here unchallenged, the west wall of defendant’s building is two inches clear of the lot line at the front or south end, is exactly on the line at the north end, and is approximately 160 feet in length.
In the action here involved, plaintiffs allege that in contructing the building defendant caused its foundation and footings to extend from two to three and a half inches upon plaintiffs’ land. They further allege that during its construction defendant trespassed upon plaintiffs’ property by permitting an I-beam to fall on their garage roof; by destroying a flower bed and line fence; by disturbing a graveled driveway, and by walking upon and digging into plaintiffs’ land. They allege still further that ‘in the operation of the defendant’s business and rental operation, the defendant permits, causes and occasions people to drive into and across the premises of the plaintiff by directing people to park in the rear and failing to disclose to the people an entrance to the east of the building, and the patrons of the store are misled by the signs directing them to park in the rear.’Plaintiffs prayed for injunction requiring that defendant remove all footings and foundations upon their property and that defendant, its servants, agents and customers be enjoined from trespassing upon their property and for damages in the sum of $1750 and exemplary damages. Upon issue raised by general denial the case was tried to a jury as to the issue of damages alleged by trespass, the court reserving the determination of the issue of injunction. On the issue of damages the jury returned a verdict in favor of the defendant. The court then found encroachment as alleged and granted mandatory injunction requiring that defendant’s projecting footings be removed from plaintiffs’ property, and further decreed ‘that the defendant take action to properly direct drivers of vehicles where they should drive and park so as to stay on defendant’s property, and the defendant shall remove any signs and directions that tend to confuse drivers of vehicles and lead them to believe that they are to drive or park on the property of plaintiffs’; then by separate order set aside the verdict of the jury and sustained plaintiffs’ motion for a new trial, on the ground that there was no evidence to support it.
Defendant specifies and argues error in setting aside the verdict of the jury and ordering a new trial as to the issue of actual and exemplary damages. However, that order was discretionary and not a final judgment to which a writ of error lies, and there was no election to stand on the case made as in Mooney v. Carter, 114 Colo. 267, 160 P.2d 390.
Challenge is also raised as to expert witness fees allowed to plaintiffs’ surveyor Coberly and his assistant, on the ground that there was no evidence as to the services performed or their value. The court was advised by the testimony of these witnesses as to their qualifications and the work which they had performed, and had knowledge of the time spent in giving testimony. The fees allowed were reasonable for their services in attending and testifying at the trial; their testimony was essential to establishing the property line between the parties and the amount of encroachment, and, under our statute there was no error in the allowance made therefor.
Error is specified to the portion of the injunctive decree requiring defendants to take action to direct drivers and to remove signs tending to confuse drivers. As to this issue the only evidence as to signs or instructions after the completion of the building was related to signs apparently issued by tenants rather than by defendant, and that evidence diclosed no sign directing people to park on plaintiffs’ land or properly tending to mislead the public. Moreover, a judgment must be definite and certain in itself.’It must fix clearly the rights and liabilities of the respective parties to the cause, and be such as defendant may readily understand and be capable of performing’.49 C.J.S., Judgments, s 72, p. 191.’The rights of the parties under a mandatory judgment whereby they may be subjected to punishment as contemnors for a violation of its provisions, should not rest upon implication or conjecture, but the language declaring such rights or imposing burdens should be clear, specific and unequivocal so that the parties may not be misled thereby.’ Plummer v. Superior Court, 20 Cal.2d 158, 124 P.2d 5, 8. Lacking in this essential requirement, the portion of the decree above referred to may not stand.
There remains for consideration the portion of the decree requiring defendant to remove the footings of its building where they encroach upon the property of the plaintiffs. Ordinarily, mandatory injunction will issue to compel removal of encroaching structures, but it is not to be issued as a matter of course. On appeal to the court for an equitable remedy, the court must consider the peculiar equities of the case. A study of many decisions discloses no specific and universally-accepted rule as to encroachments. Even in jurisdictions like Massachusetts, in which it has been declared that mandatory injunction for removal of encroachment can only be denied where estoppel or laches is shown, Beaudoin v. Sinodinos, 313 Mass. 511, 48 N.E.2d 19, there are numerous cases where injunction has been refused in the absence of those defenses. See cases cited as exceptional in Gerogosian v. Un. Realty Co., 289 Mass. 104, 193 N.E. 726, 96 A.L.R. 1282. Generally in other jurisdictions such harsh rule is not followed. Sometimes a slight and harmless encroachment is held to be within the rule ‘de minimis,’ as in Tramonte v. Colarusso, 256 Mass. 299, 152 N.E. 90, and McKean v. Alliance Land Co., 200 Cal. 396, 253 P. 134, and generally the courts require that he who seeks equity should do equity and come with clean hands.Tramonte v. Colarusso, supra; McKee v. Fields, 187 Or. 323, 210 P.2d 115.
Where the encroachment is deliberate and constitutes a willful and intentional taking of another’s land, equity may well require its restoration regardless of the expense of removal as compared with damage suffered therefrom; but where the encroachment was in good faith, we think the court should weigh the circumstances so that it shall not act oppressively. 5 Pomeroy’ Equity Jurisprudence, page 852, s 508. While the mere balance of convenience is not the proper test, yet relative hardship may properly be considered and the court should not become a party to extortion.Restatement of the Law, Torts, s 941. Where defendant’s encroachment is unintentional and slight, plaintiff’s use not affected and his damage small and fairly compensable, while the cost of removal is so great as to cause grave hardship or otherwise make its removal unconscionable, mandatory injunction may properly be denied and plaintiff relegated to compensation in damages. Owenson v. Bradley, 50 N.D. 741, 197 N.W. 885, 31 A.L.R. 1296, Ann. 14 A.L.R. 831, 31 A.L.R. 1302, 76 A.L.R. 1287; Nebel v. Guyer, 99 Cal.App.2d 30, 221 P.2d 337; Mary Jane Stevens Co. v. First Nat’l Bldg. Co., 89 Utah 456, 57 P.2d 1099.
In the case before us issue was raised in the argument as to whether or not the encroachment was intentional. There was no finding on this issue by the trial court and the decree is not necessarily predicated upon intent. In the absence of proof to the contrary there is a presumption that men act in good faith and that they intend to do what they have the right to do. Prior to the building of the wall, plaintiffs and defendant each employed a surveyor, but neither was called as a witness and the results of their surveys are not disclosed except that, as stated by plaintiff Reid, before there was any digging done plaintiff’s employed Prouty to survey and defendants employed Linn to survey ‘and there semed to be a little difficulty in their agreeing. Mr. Prouty came out and made another survey, and Mr. Linn came out and made another survey and, of course, all this time the building was progressing.’Plaintiff Rylands testified that she called Prouty to survey twice ‘because there was trouble between the lines. They had called their surveyor, and they weren’t satisfied, and we weren’t satisfied, and Mr. Prouty was called back to resurvey, to look the figures over, and the lines,’ during the course of construction. There is no indication from the record as to whether or not these surveyors agreed after their resurveys. Plaintiffs rely entirely as to the location of the line upon the survey by Coberly and his assistant, who were employed by plaintiffs and made their survey just prior to the trial and long after the wall was completed. Plaintiff Rylands’ brother, Thomas P. Nother, upon whom plaintiffs relied to show knowledge and intent as to the line on the part of defendant’s agents, testified as to Coberly’s survey: ‘He found out their north end of their building was right on the line, and the south end of their building was a little bit inside the line, that is how I determined that they were over with their footings so far.’With reference to the earlier surveys, witness Nother testified that before the concrete was poured for the foundation, he informed Mr. Ernst who was superintendent of construction that his building was about eight inches over the line and Ernst replied, ‘You’re wrong, we have got our own surveyor. He has put us on the line’; that witness answered, ‘Well, I am not going to argue about it, I am warning you, you are over your line,’ and that thereupon the superintendent had the laborers move the forms over.
Defendant’s witness Argo, who had charge of constructing the wall, testified that he had a survey line run by Linn and they dug the hole for the footings right straight down to the property line; that the lady next door had made a statement that they were on her property and they had another survey run and ‘the surveyor told us we better move over, as I remember, two inches, and we did.’ He further testified, ‘We weren’t going to form that footing, and then the people next door made a little fuss about us being on their property, so we put a form in for that footing, so it would be on our side.’
There is disclosed continued argument by plaintiffs with representatives of defendant during construction of the wall as to trespassing on their lands, but we find no evidence from the record challenging the good faith of defendant’s representative in locating the footings.
Again we note that while plaintiffs were continually complaining as to trespass of the workmen on their property, they took no steps for injunction or other legal determination of the disputed line until after both the foundation and upper wall were completed.
Further, we note that the encroachment here complained of is very slight. It is conceded that the wall above the foundation does not project over the property line and that the only encroachment consists of a projection of the footings a distance of two inches at the middle, increasing to three and a half inches at the north end. The top of these footings is about seven feet below the surface of the ground and they go down to nine feet below the surface. They constitute no interference whatever with plaintiffs’ present use of the property as a driveway and iris bed, and the only testimony as to future damage was to the effect that if plaintiffs wished to build to their line with a basement, they would have to detour around this slight projection of defendant’s footings.
The testimony indicates that the value of plaintiffs’ lands is approximately $200 per front foot, so that if defendant had taken the entire strip of three and a half inches both at and below the surface, its value would have been only about $55, and the value of the portions extending from seven to nine feet below the surface and only along the rear eighty feet of wall would appear to be very small. Plaintiffs, at the trial, refused defendant permission to enter upon their property for the purpose of chipping off the encroaching footings with a jack hammer, and demanded that they be removed from defendant’s side of the land, if necessary by tearing down the wall. The expense and hardship of such removal would be so great in comparison with any advantage of plaintiffs to be gained thereby that we think it would be unconscionable to require it, and that under all the circumstances disclosed mandatory injunction should have been denied by the trial court, with permission for plaintiffs to proceed, if desired, in damages.
Accordingly, the injunctive decree is reversed and the case remanded for further proceedings, if desired, consistent herewith.
Hilliard, J., not participating.
1.3. Improving Trespassers
Somerville v. Jacobs,
170 S.E.2d 805 (W. Va. 1969)
Richard F. Pence, Parkersburg, for appellants.
Wilson & Hill, George W. Hill, Jr., Burk & Bayley, Robert W. Burk, McDougle, Davis & Morris, Fred L. Davis, Parkersburg, for appellees.
The plaintiffs, W. J. Somerville and Hazel M. Somerville, … , the owners of Lots 44, 45 and 46 in the Homeland Addition to the city of Parkersburg, in Wood County, believing that they were erecting a warehouse building on Lot 46 which they owned, mistakenly constructed the building on Lot 47 owned by the defendants, William L. Jacobs and Marjorie S. Jacobs, … . Construction of the building was completed in January 1967 and by deed dated January 14, 1967 the Somervilles conveyed Lots 44, 45 and 46 to the plaintiffs Fred C. Engle and Jimmy C. Pappas who subsequently leased the building to the Parkersburg Coca-Cola Bottling Company, a corporation. Soon after the building was completed but not until then, the defendants learned that the building was on their property and claimed ownership of the building and its fixtures on the theory of annexation. The plaintiffs then instituted this proceeding for equitable relief in the Circuit Court of Wood County and in their complaint prayed, among other things, for judgment in favor of the Somervilles for $20,500.00 as the value of the improvements made on Lot 47, or, in the alternative, that the defendants be ordered to convey their interest in Lot 47 to the Somervilles for a fair consideration… . . [Both parties moved for summary judgment after discovery and stipulations.]
By final judgment rendered June 11, 1968, the circuit court required the defendants within 60 days to elect whether they would (1) retain the building and pay W. J. Somerville $17,500.00 or suffer judgment against themselves in his favor in that amount, or (2) convey title to Lot 47 of Homeland Addition to W. J. Somerville for the sum of $2,000.00 cash… . .
This case was submitted for decision upon the record of proceedings in the trial court and the briefs and the oral arguments in behalf of the defendants. The brief in behalf of the plaintiffs, not having been filed within the time required by the provisions of Rule VI of this Court and the defendants having refused to waive the requirement of the rule, oral argument in behalf of the plaintiffs was not permitted upon the submission of the case.
The controlling question for decision is whether a court of equity can award compensation to an improver for improvements which he has placed upon land not owned by him, which, because of mistake, he had reason to believe he owned, which improvements were not known to the owner until after their completion and were not induced or permitted by such owner, who is not guilty of any fraud or inequitable conduct, and require the owner to pay the fair value of such improvements or, in the alternative, to convey the land so improved to the improver upon his payment to the owner of the fair value of the land less the value of the improvements.
Though the precise question here involved has not been considered and determined in any prior decision of this Court, the question has been considered by appellate courts in other jurisdictions and though the cases are conflicting the decisions in some jurisdictions, upon particular facts, recognize and sustain the jurisdiction of a court of equity to award compensation to the improver to prevent unjust enrichment to the owner and in the alternative to require the owner to convey the land to the improver upon his payment to the owner of the fair value of the land less the improvements.
In the early case of Bright v. Boyd, 4 Fed.Cas. p. 127, a Federal trial court held in an opinion by Justice Story that an improving occupant could institute and maintain a suit in equity to secure compensation for his improvements on land of the owner and that as a doctrine of equity an innocent purchaser for valuable consideration, without notice of any infirmity in his title, who by his improvements added to the permanent value of the owner is entitled to compensation for the value of the improvements and to a lien upon the land which its owner must discharge before he can be restored to his original rights in the land.
In the early Kentucky case of Thomas v. Thomas’ Executor, 55 Ky. (16 B. Mon.) 420, the court recognized the equitable principle that one who acquires title to land bona fide, and enters upon and improves it, supposing it to be his own, is entitled to compensation for improvements.
In the leading case of Union Hall Association v. Morrison, 39 Md. 281, a plaintiff who claimed title to a small lot, entered by mistake into possession of other land in the neighborhood of such lot and erected on such land a valuable building and who, after having been ousted from the possession of the land in an action by its owner, instituted a suit in equity for compensation for the improvements. In that case the court held that although there was nothing in the conduct of the defendant owner which created an equitable estoppel as he had been ignorant of his rights, the plaintiff, whose good faith was beyond question, had an equitable right to compensation for the improvements; that the defendant should have the option of accepting from the plaintiff payment for the lot for its value without the improvements and conveying the lot to the plaintiff, or of holding the lot with the improvements upon payment to the plaintiff their actual value to the extent that they enhanced the value of his lot, and that the plaintiff was entitled to a lien for the value of the improvements and, upon default in the payment for such improvements, the property should be sold to enforce such payment. In discussing the relief to which the plaintiff was entitled the opinion contains this language:
With respect to the nature and terms of the decree it will be proper that the appellee shall have the option to accept from the appellant payment for the lot of ground, estimated at its just value, without the improvements thereon, and be required on the payment thereof with interest, to convey the same to the appellant, by a sufficient deed. Or at his election to take and hold the lot with improvements, paying to the appellant the actual value of the improvements, to the extent of the additional value which they have conferred upon the land, and in default of such payment, the same ought to be declared to be a lien, and charge on the property, and the lot and improvements should be decreed to be sold for the payment thereof.
[The court reviews a large number of cases from other states where courts recognized an equitable interest in a good-faith, improving trespasser in the land improved or the value of the improvements.]
From the foregoing authorities it is manifest that equity has jurisdiction to, and will, grant relief to one who, through a reasonable mistake of fact and in good faith, places permanent improvements upon land of another, with reason to believe that the land so improved is that of the one who makes the improvements, and that the plaintiffs are entitled to the relief which they seek in this proceeding.
The undisputed facts … is [sic] that the plaintiff W. J. Somerville in placing the warehouse building upon Lot 47 entertained a reasonable belief based on the report of the surveyor that it was Lot 46, which he owned, and that the building was constructed by him because of a reasonable mistake of fact and in the good faith belief that he was constructing a building on his own property and he did not discover his mistake until after the building was completed. It is equally clear that the defendants who spent little if any time in the neighborhood were unaware of the construction of the building until after it was completed and were not at any time or in any way guilty of any fraud or inequitable conduct or of any act that would constitute an estoppel. In short, the narrow issue here is between two innocent parties and the solution of the question requires the application of principles of equity and fair dealing between them.
It is clear that the defendants claim the ownership of the building. Under the common law doctrine of annexation, the improvements passed to them as part of the land. Dawson v. Grow, 29 W.Va. 333, 1 S.E. 564; Bailey v. Gardner, 31 W.Va. 94, 5 S.E. 636, 13 Am.St.Rep. 847. This is conceded by the plaintiffs but they assert that the defendants can not keep and retain it without compensating them for the value of the improvements, and it is clear from the testimony of the defendant William L. Jacobs in his deposition that the defendants intend to keep and retain the improvements and refuse to compensate the plaintiffs for their value. The record does not disclose any express request by the plaintiffs for permission to remove the building from the premises if that could be done without its destruction, which is extremely doubtful as the building was constructed of solid concrete blocks on a concrete slab, and it is reasonably clear, from the claim of the defendants of their ownership of the building and their insistence that certain fixtures which have been removed from the building be replaced, that the defendants will not consent to the removal of the building even if that could be done.
In that situation if the defendants retain the building and refuse to pay any sum as compensation to the plaintiff W. J. Somerville they will be unjustly enriched in the amount of $17,500.00, the agreed value of the building, which is more than eight and one-half times the agreed $2,000.00 value of the lot of the defendants on which it is located, and by the retention of the building by the defendants the plaintiff W. J. Somerville will suffer a total loss of the amount of the value of the building. If, however, the defendants are unable or unwilling to pay for the building which they intend to keep but, in the alternative, would convey the lot upon which the building is constructed to the plaintiff W. J. Somerville upon payment of the sum of $2,000.00, the agreed value of the lot without the improvements, the plaintiffs would not lose the building and the defendants would suffer no financial loss because they would obtain payment for the agreed full value of the lot and the only hardship imposed upon the defendants, if this were required, would be to order them to do something which they are unwilling to do voluntarily. To compel the performance of such an act by litigants is not uncommon in litigation in which the rights of the parties are involved and are subject to determination by equitable principles. And the right to require the defendants to convey the lot to the plaintiff W. J. Somerville is recognized and sustained by numerous cases cited earlier in this opinion. Under the facts and circumstances of this case, if the defendants refuse and are not required to exercise their option either to pay W. J. Somerville the value of the improvements or to convey to him the lot on which they are located upon his payment of the agreed value, the defendants will be unduly and unjustly enriched at the expense of the plaintiff W. J. Somerville who will suffer the complete loss of the warehouse building which by bona fide mistake of fact he constructed upon the land of the defendants. Here, in that situation, to use the language of the Supreme Court of Michigan in Hardy v. Burroughs, 251 Mich. 578, 232 N.W. 200, “It is not equitable * * * that defendants profit by plaintiffs’ innocent mistake, that defendants take all and plaintiffs nothing.”
To prevent such unjust enrichment of the defendants, and to do equity between the parties, this Court holds that an improver of land owned by another, who through a reasonable mistake of fact and in good faith erects a building entirely upon the land of the owner, with reasonable belief that such land was owned by the improver, is entitled to recover the value of the improvements from the landowner and to a lien upon such property which may be sold to enforce the payment of such lien, or, in the alternative, to purchase the land so improved upon payment to the landowner of the value of the land less the improvements and such landowner, even though free from any inequitable conduct in connection with the construction of the building upon his land, who, however, retains but refuses to pay for the improvements, must, within a reasonable time, either pay the improver the amount by which the value of his land has been improved or convey such land to the improver upon the payment by the improver to the landowner of the value of the land without the improvements.
It is pertinent to observe that, in cases involving the right to recover for improvements placed by mistake upon land owned by one other than the improver, the solution of the questions involved depends largely upon the circumstances and the equities involved in each particular case. Here, under the facts as stipulated by the parties, the equities which control the decision are clearly in favor of the plaintiffs.
To reverse the judgment of the circuit court the defendants cite and rely upon several cases which are clearly distinguishable upon their facts from the case at bar and are not applicable to or controlling of the decision in the instant proceeding.
In Dawson v. Grow, 29 W.Va. 333, 1 S.E. 564, the improver was guilty of negligence in not consulting the registration records, which would have informed her that the property which she claimed had been previously conveyed to another by deed of record, and because of her negligence she was held not to be entitled to compensation for improvements. In Hall v. Hall, 30 W.Va. 779, 5 S.E. 260 [and other cases] the title of the improver in each instance to the land improved was questionable and the improvements in each instance were made under a mistake of law concerning such title against which, as stated in the Hall case, “courts cannot relieve.”, and for that reason compensation for improvements was denied. In [other cases] questions of estoppel were involved which are not presented in the case at bar. In Harrison v. Miller, 124 W.Va. 550, 21 S.E.2d 674, a constructive trustee of real estate placed improvements upon it with his individual funds. At the time he did so he was chargeable with knowledge that others were beneficially entitled to such land and for that reason he was not entitled to charge the land with the money which he had expended for such improvements.
In Cautley v. Morgan, 51 W.Va. 304, 41 S.E. 201, the defendants Morgan and Huling and the plaintiff Cautley were owners of adjoining lots fronting on Quarrier Street in Charleston, West Virginia. The plaintiff, being desirous of building a party wall between the lots for a business building on her lot, entered into an agreement with the defendants by which, among other things, she was given the right to construct the wall to the extent of ten inches upon the lot of the defendants. In constructing the wall the plaintiff, by mistake, built it six inches farther on the land of the defendants than the ten inches provided for in the contract. The wall was completed in 1893 and in the fall of 1899 the defendants, desiring to use the wall, discovered the mistake. They notified the plaintiff and, after unsuccessful efforts were made to adjust the matter, the defendants instituted an action of ejectment against the plaintiff to recover the land on which the plaintiff had encroached in the construction of the wall. In a suit by the plaintiff to enjoin the prosecution of the action of ejectment, the court refused the injunction and dismissed the bill with costs. In the opinion the court said: “It seems to be one of those cases where there was no intentional fault upon the part of either, but by the improper action, though unintentional of one of the parties a mistake was made, whereby one party or the other must suffer a hardship. This being the case, it is held: That that party, upon whom a duty devolves and by whom the mistake was made, should suffer the hardship rather than he who had no duty to perform and was no party to the mistake.” It appears, however, from the facts that the plaintiff, in undertaking to build the wall and assuming the responsibility of fixing the location herself, had the duty to see that it was properly located and that she had sufficient data to enable her to avoid the mistake if she had used the data with proper care. In other words the plaintiff, by not making proper use of the available data, was guilty of careless or negligent conduct in making the mistake. She was limited by the contract to place the wall upon only ten inches of the defendants’ property and in making an encroachment of more than ten inches she was also guilty of breach of the contract. Accordingly she was not entitled to equitable relief and the case is distinguishable from the case at bar for those reasons and for the additional reason that the loss of a portion of the wall of the width of only six inches would be a relatively insignificant hardship compared to the complete loss here involved of an entire building of the admitted value of $17,500.00.
In reaching the conclusion to deny the injunction, the court followed closely the case of Kirchner v. Miller, 39 N.J.Eq. 355, … . In that case, as so indicated, the plaintiff and the defendant were owners of adjoining lots, the plaintiff employed a surveyor to fix the dividing line which he mislocated, and the plaintiff, supposing that he was building on his own land, inadvertently placed his house a few inches on the lot of the defendant who was not aware of the encroachment. The court held that equity would not enjoin an action of ejectment by the defendant against the plaintiff to recover possession of the strip of land on which he built the house in question. In that case it appeared, also as previously indicated, that the plaintiff could have removed the part of the building on the lot of the defendant at an expense of $75.00 and the defendant admitted that the loss of the strip would cause no injury to his house but would reduce the value of the lot in the amount of $150.00. It is evident that the court in the Kirchner case was influenced by the lack of hardship sustained by the plaintiff by reason of his mistake, for in the opinion the court said “Where there is no hardship there is no ground for interference. This case is not one for the application of the doctrine.” In the Kirchner case, in commenting upon the holding in McKelway v. Armour, 10 N.J.Eq. (2 Stock.) 115, in which it was held that the plaintiff was entitled to be paid for the improvements by the landowner or that the landowner was required to sell his property to the plaintiff at a price to be fixed by the court or to exchange properties with him, the court, by way of dictum, said: “The exercise of such a judicial power, unless based upon some actual or implied culpability on the part of the party subjected to it, is a violation of constitutional right.” The same statement, also by way of dictum, appears in the opinion in the Cautley case and it also appears, as a citation from the Kirchner case, in the opinion in Olin v. Reinecke, 336 Ill. 530, 168 N.E. 676. In no other of the many cases that have been considered does any such statement appear. Such statement, being mere dictum, is contrary to the holdings in numerous cases previously cited in this opinion, in which the conveyance of the improved property by the landowner was required and held to be proper. Of course, in an ordinary situation, no court could or would undertake to require a person to convey his land to another who might desire it, but such conveyance may properly be required in litigation in which the rights of the parties, including such landowner, are involved and which are subject to determination upon principles of equity.
The judgment of the Circuit Court of Wood County is affirmed.
Caplan, Judge, dissenting:
Respectfully, but firmly, I dissent from the decision of the majority in this case. Although the majority expresses a view which it says would result in equitable treatment for both parties, I am of the opinion that such view is clearly contrary to law and to the principles of equity and that such holding, if carried into effect, will establish a dangerous precedent.
Basically, I believe that the principles expressed in Cautley v. Morgan, 51 W.Va. 304, 41 S.E. 201, reflect my view of this matter and that that case cannot realistically be distinguished from the instant case, as was attempted in the majority opinion. In that opinion it was said that the plaintiff who encroached upon the defendant’s property was guilty of “careless or negligent conduct in making the mistake.” The opinion reasoned that the plaintiff had the duty to see that the wall was properly located and that she had sufficient data to enable her to avoid the mistake if she had used the data with proper care. Certainly, in the instant case the plaintiff, had he caused to be made a proper survey and had exercised proper care, would have constructed the subject building on his own property rather than on that of the defendant. It occurs to me that the failure to use proper care is more evident in this case than it was in Cautley.
The majority opinion appears to rely on McKelway v. Armour, 2 Stock. (10 N.J.Eq.) 115 for the proposition that the owner of property upon which a building was mistakenly built must either purchase the building or sell his property. This case, decided in 1854, was substantially overruled some thirty years later by Kirchner v. Miller, 39 N.J.Eq. 355 wherein the court said of the decision in McKelway, “[t]he exercise of such a judicial power, unless based upon some actual or implied culpability on the part of the party subjected to it, is a violation of constitutional right. No tribunal has the power to take private property for private use. The Legislature itself cannot do it.” This precise language was used by the Court in Cautley in rejecting the view taken in McKelway. In Cautley the Court held: “That that party, upon whom a duty devolves and by whom the mistake was made, should suffer the hardship rather than he who had no duty to perform and was no party to the mistake.” See 7 M.J., Equity, Section 25.
I am of the opinion that the Cautley case is not distinguishable from the instant case and that the language which says that such taking of property violates a constitutional right is not mere dictum as expressed in the majority opinion.
I am aware of the apparent alarmist posture of my statements asserting that the adoption of the majority view will establish a dangerous precedent. Nonetheless, I believe just that and feel that my apprehension is justified. On the basis of unjust enrichment and equity, the majority has decided that the errant party who, without improper design, has encroached upon an innocent owner’s property is entitled to equitable treatment. That is, that he should be made whole. How is this accomplished? It is accomplished by requiring the owner of the property to buy the building erroneously constructed on his property or by forcing (by court edict) such owner to sell his property for an amount to be determined by the court.
What of the property owner’s right? The solution offered by the majority is designed to favor the plaintiff, the only party who had a duty to determine which lot was the proper one and who made a mistake. The defendants in this case, the owners of the property, had no duty to perform and were not parties to the mistake. Does equity protect only the errant and ignore the faultless? Certainly not.
It is not unusual for a property owner to have long range plans for his property. He should be permitted to feel secure in the ownership of such property by virtue of placing his deed therefor on record. He should be permitted to feel secure in his future plans for such property. However, if the decision expressed in the majority opinion is effectuated then security of ownership in property becomes a fleeting thing. It is very likely that a property owner in the circumstances of the instant case either cannot readily afford the building mistakenly built on his land or that such building does not suit his purpose. Having been entirely without fault, he should not be forced to purchase the building.
In my opinion for the court to permit the plaintiff to force the defendants to sell their property contrary to their wishes is unthinkable and unpardonable. This is nothing less than condemnation of private property by private parties for private use. Condemnation of property (eminent domain) is reserved for government or such entities as may be designated by the legislature. Under no theory of law or equity should an individual be permitted to acquire property by condemnation. The majority would allow just that.
I am aware of the doctrine that equity frowns on unjust enrichment. However, contrary to the view expressed by the majority, I am of the opinion that the circumstances of this case do not warrant the application of such doctrine. It clearly is the accepted law that as between two parties in the circumstances of this case he who made the mistake must suffer the hardship rather than he who was without fault. Cautley v. Morgan, supra.
I would reverse the judgment of the Circuit Court of Wood County and remand the case to that court with directions that the trial court give the defendant, Jacobs, the party without fault, the election of purchasing the building, of selling the property, or of requiring the plaintiff to remove the building from defendant’s property.
I am authorized to say that Judge Berry concurs in the views expressed in this dissenting opinion.
Problem related to Adverse Possession
For fifteen years, Marty Spelunker has offered to the public caving expeditions in “Marty Caverns,” as he advertises them. In the beginning, Marty supplied all the necessary equipment and led small groups into the caverns through a small entrance in the northwest corner of his property – all for $20 per person for a day trip and $60 per person for a three-day expedition.
When word got around the spelunking community about some of the rare features in Marty Caverns, business picked up. Marty began charging a bit more and hired additional guides. Five years ago, a story about Marty Caverns appeared in Outside Magazine. Marty increased his staff further but still could not keep up with demand. At the same time, Marty constructed walkways around some of the more delicate parts of the cave, and in another part placed a souvenir and photo stand – both at considerable expense.
A year ago, Nancy Neighbor was forced to extend the depth of her water well. On doing so, she unwittingly drilled into Marty Caverns. Marty went to talk with Nancy, explaining the fragility of the cave ecosystem and urging her to find another source for her water rather than attempting to drill wells on her property.
After talking with a lawyer, Nancy wrote a letter to Marty demanding rental income for conducting “ongoing expeditions on my property.” Marty immediately calls you, his lawyer, for advice. What is your analysis of this situation and what do you tell Marty? Suppose that the statutory period for adverse possession is ten years in this jurisdiction.
This problem is based on an actual case, Marengo Cave Co. v. Ross, 212 Ind. 624, 10 N.E.2d 917 (Ind. 1937). The central issue there, and the focus of the casebooks that discuss the case, is the “open and notorious” element of the adverse possession doctrine. As we’ll see, though, it’s not the only concept that is taxed by the facts in this case.
Does Nancy Own the Caves Below Her Land?
In the problem, Nancy is demanding payment for Marty’s use of “her” land. Her theory must be that her right to exclude extends laterally over all the lands to which she has title and downward from the surface to the center of the Earth – the old common law doctrine, ad coelum ad infernos (from the heavens to the depths).
We’ve discussed briefly in class how this doctrine was severely limited after the invention of the airplane and the development of transcontinental air travel. If individual property owners could enforce their rights to exclude against overflying airplanes (or satellites), then airlines would be forced to acquire licenses to overfly land. It isn’t too difficult to see that this would be a mess, at least without some extremely careful and innovative market devices. Even if there were no holdouts, the transaction costs associated with acquisition of overflight rights would be enormous. Yet, without these transaction costs, we’re confident the deals would go through. That is, in general, airlines value overflight rights much more than most individuals actually value the extent to which the sanctity of the airspace over their property would be diminished by overflying airplanes. But even though there might be some landowners who really would not sell to the airlines, it might still be better to place the initial entitlement in the airlines, on the theory that we’re better off if those few individuals who wish to exclude airplanes must pay off the small collection of airlines than if the airlines had to buy entitlements from everybody. I won’t go any further in this analysis except to note that this shift in entitlements has uneven distributional effects: people near airports have faced diminution in the value of their property (at least as residential property) not encountered by the farmer in Iowa whose property is overflown by the occasional transcontinental jet at 35,000 feet. The neighbors of airports really might have held out for a high price, but in lieu of granting them rights to block, we’ve built up a fair amount of legal machinery aimed at minimizing noise, pollution, etc, though these efforts to mitigate may disproportionately benefit wealthy landowners.
All that’s an aside but one that helps frame an initial question not dealt with by the court in Marengo Cave Co.: why not limit a landowner to surface rights, creating a commons in subterranean exploration and recreation, just as there is a regulated commons in airspace?
Put differently, is there a good reason to continue the common law rule that landowners can exclude others from the space below their property when we have dramatically curtailed their right to exclude from the space above their property? If we recognized a commons in the underground, then Marty would win this case.
But, of course, the underground, at least the immediate underground, is relevantly different from the sky. First, there is a long history not only of formal recognition of property interests in the underground, but also of actual use and appropriation from the underground – think oil, gas, and other minerals. When we expropriated landowner’s rights to exclude planes, we took away certain non-use interests, and only to a very limited extent, but if we expropriate subterranean rights, we’re taking away something of tangible and, sometimes, high value. Second, there isn’t really a publicly important industry that depends on gaining underground rights in a manner that might be frustrated by forcing it to buy such rights from willing sellers. Even with something like oil, a holdout is not much of a problem. The worry for airlines was that random holdouts would create a patchwork of no-fly zones that necessitated wasteful (if not impossible) routing. A route is a continuous line, and once rights are obtained along much of a route someone else along the route could engage in strategic bargaining to try to capture profits from the route. Put differently, overflight rights are path dependent and location- sensitive, whereas mineral rights are not.
We’re probably not worried that spelunking will become prohibitively expensive or be blocked entirely by holdouts. It’s (a) not as important an industry as air travel so that blocking is both less likely and less of a concern and (b) more like oil in that owners are less likely to engage in strategic bargaining because most underlying caverns do not become dramatically more valuable as other caverns are acquired. (Though not exactly like oil: imagine a large, ecologically significant perhaps, cave system the continuity of which depends on a few passageways all underlying the land of a single owner. The ability to use the caverns might be significantly impeded without rights to use the passageways, and so the owner might be in a position to hold out.) You might think of other reasons in addition that argue in favor of keeping the ad inferno part of the old doctrine, even as we have jettisoned a substantial aspect of the ad coelum part.
To end this rather long detour, the court will certainly conclude that Nancy “owns” all the underground below her land. The question is whether she has lost this property, either in part or in total.
Has Nancy Lost Her Subterranean Interest?
We’ve studied a couple of ways this loss can occur. First, adverse possession vests title in adverse possessors automatically at the end of the relevant limitations period. Second, we’ve studied cases that attempt to limit forfeiture when improvements either encroach on or lie entirely on the land of another.
In any adverse possession problem, we should start by listing the elements and then just march through them – as the court did in the Marengo Cave case. Any decent lawyer or judge would do that. But the resolution of these elements in hard cases requires a bit more. Here, we’re going to get hung up on “open and notorious,” and a satisfying reult probably cannot be reached just by thinking hard about what those words mean.
Here are the elements: (1) Actual possession, (2) Open and notorious, (3) Exclusive, (4) Hostile, (5) Continuous, (6) for the statutory period. These can be arranged in any order to yield a more or less memorable acronym – feel free. Some courts also include “under a claim of right” and payment of taxes. If you discussed the role of property taxes in this case, that’s fine. But many courts do not require it, and I won’t assume the court in this hypothetical jurisdiction does.
Actual possession: Here, the caverns were used just as we’d expect a true owner of the caverns to use them. It doesn’t matter that Marty hasn’t constructed a dwelling in the caverns. Some courts formulate the standard as whether the property was possessed in a manner that gives notice. As to this question, courts split on questions such as whether adverse possession of rural land requires less presence (on the theory that true owners of rural lands tend to occupy their land less intensely) or more presence (on the theory that more activity is necessary to give notice to the true owner of rural lands). required on rural land. You could discuss the major issue in this problem with respect to this element, but the “open and notorious” element appears better suited to probe whether the possession was sufficient to give notice. This case is interesting in part because it is clear that there was “possession” but at the same time questionable whether it was “open” that the possession was of the true owner’s land. In most other cases, these two elements are less distinct.
Exclusive: There is no question that Marty has not shared his asserted rights to the caverns with others. He has been charging admission after all.
Hostile: The general rule is that only objective hostility to the record owner’s formal interests is required. That’s certainly met here. Marty would not win in a jurisdiction that required the APor to know that the land was not his (only land pirates win). But Marty would likely satisfy this element in those few jurisdictions that impose a good faith requirement. Note also that there is no evidence of any permission from Nancy. And even if we were in a jurisdiction that presumed permission on land like this, that presumption could be rebutted here, where it’s relatively clear from her conduct that Nancy had no idea that she owned any of portion of the caverns – or at least, we’re pretty confident that additional facts can be marshaled to rebut the presumption..
Continuous: As with actual possession, we only require as much continuity as a record owner would exhibit. Seasonal occupancy is fine, for example, on land that is typically occupied seasonally. Here, Marty doesn’t live in the caverns, but it’s clear that he makes regular use of them – likely even to a greater extent than average cave-owners make.
Statutory period: The instructions tell us that the limitations period is 10 years in this jurisdiction. Marty has been operating the cave (from an entrance on his property) for 15 years. The evidence seems to be that he has met the above-listed elements for that long.
The question though is how long Marty’s possession of the caves has been “open and notorious” – and that question might be resolved differently for the first ten years than for the last five. For the last 5 years, Marty has been operating the caverns under greater publicity and has added improvements. But five years is not enough, and so unless the possession was open and notorious before these improvements and publicity, Marty will lose on an AP claim.
Open and notorious: Here’s the rub. Recall in the Gobble case that evidence concerning the reputation in the community was used to support the possessors’ claim on this element. Neighbors testified that they thought the possessors were the owners of the land in question. But what exactly are we probing here? Whether the possession was out in the open enough that a reasonable owner would have discovered it? That seems to be what most courts say, and it fits with the “owner negligence” theory of adverse possession. Indeed, the Marengo Caves case is explicit about this: “Where there has been no actual notice, it is necessary to show that the possession of the disseisor was so open, notorious, and visible as to warrant the inference that the owner must or should have known of it.”
The court in Marengo Caves cashes this out as a question whether a common observer would assume the land belonged to the possessor – much like the Gobble court relied on community reputation. The Marengo Caves court separately inquired into “notoriety” and explicitly tied this element to community reputation – stating that APors’ possession must be “manifest to the community.”
The cave cases force us to draw a distinction between the questions whether the possession itself was “open and notorious” and whether it was “open and notorious” that the possession was of a particular parcel of land. This is the most important issue in this problem: Here, there is little question that Marty’s operation of the caves was open and notorious; the issue is whether it was open and notorious that his possessory interest burdened the particular overlying parcel at issue. You could give a fine answer by arguing this issue either way. But we won’t find a way out of this dilemma just by thinking about what the words “open and notorious” mean. Instead, we’ll have to consider the purpose of adverse possession doctrine to discover how a court is likely to rule or should rule.
If adverse possession is about punishing O’s negligence, then it will be more difficult to conclude that adverse possession occurred here. We’ll have to think about whether it’s negligent for an owner near a large (famous?) underground cave system to fail to undertake measures to discover whether any part of the caves underlie her property. (We ask this question with respect to this element, because the open and notorious element most closely resembles this inquiry.) The Marengo Caves court is an exemplar of this mode of interpretation and concluded that there was no way absent a survey that the true owner could have known about the intrusion. That may be, but the same might be said of any number of garden variety boundary disputes. The question is whether we think owners in such circumstances ought to get surveys if they value their property enough to fight an AP claim. We do so believe as to boundary disputes, and it doesn’t seem too radical to suggest that those residing near large, well-known cave systems ought to get a survey to determine their ownership rights if they’d like to claim a piece of the caves.
You could, of course, disagree, and side with the Marengo Caves court.
But we might wish to emphasize the other justifications for adverse possession, especially if we’re Marty’s lawyer. (See notes – efficiency improvements – including encouraging use, encouraging monitoring, reducing transaction costs – reliance, endowment effect.) If AP is not about punishing negligent Os, then we might construe the open and notorious requirement as demanding only that the possession itself not be hidden – not that the possession be clearly tied to an identifiable surface parcel. Even if it wouldn’t be negligent for an owner to fail to ascertain whether the possession is adverse, we would still, under these other theories, recognize the adverse possession. If you made this argument, you’d want to tie it to specific theories from the list above.
Note finally the odd asymmetry this case exposes. Adverse possession of the overlying land would almost certainly give title to both the surface and the underground – even without actual possession of the underground. Here, on the other hand, if Marty wins he certainly won’t be awarded both the caverns and the surface. So the AP theory must be that Marty has effected a severance: he gets the underground, while Nancy keeps the surface – like adverse possession of a hedgerow gives the possessor only title to the hedgerow, not all of the adjoining land.
This somewhat problematic distinction is probably what led some of you to wonder whether Marty really ought to take only a prescriptive easement for continued use of the underground, arguing that the caverns are more like a trail on the surface. Perhaps – the line between “use” and “possession” is not free of ambiguity. But it seems to me that Marty’s use is at least as “possessory” as the Fagerstroms’ in Nome 2000. True, they spent the night on their “claim” on a regular, if not frequent, basis. But, to me, Marty’s intensive commercial use and overnight expeditions put this case on the “possession” side rather than the “use” side. You could argue otherwise.
Finally, if Marty loses, might he still have a claim for the value of his improvements.
Recall that people who have encroached on other’s land, or built structures entirely on neighboring land, may get something even if they do not meet the requirements of adverse possession. The old common law doctrine held that the true owner could always demand that the encroacher tear down the encroaching structure. These days, most courts follow the relative hardship doctrine. Under this doctrine, encroachers still don’t get title free of charge, as they would under adverse possession. But they do gain the right to force the sale of either the land underlying the encroachment or of an easement. The doctrine is applied only when three elements are met. (You should not invoke this doctrine in your answer without discussing these elements.) The encroachment must be (1) in good faith, (2) an insubstantial interference with the true owner’s rights, and (3) expensive to remove.
The fact pattern is not clear as to whether any of the physical improvements in the cave merely encroach on Nancy’s land (without benefiting that land) or lie entirely on Nancy’s land in a way that they could be called improvements. If the former, then the relative hardship doctrine might apply, but it’s not easy to see how. First, the easy part: Marty is clearly a good faith encroacher if he is an encroacher at all. So, if the walkways lie only partly on Nancy’s property, in such a way that they cannot reasonably be moved or removed, then perhaps the doctrine will work to permit Marty to force a sale of that portion of the caves on which the encroaching portion of the walkways lie. It’s not at all clear how a court might resolve the question of whether the interference is substantial, and in any event would require us to know a lot more about the physical layout of the caverns and the walkways. We also don’t know where the souvenir stand is. If it merely encroaches on Nancy’s property, rather than being located entirely on it, then perhaps the doctrine could apply. We’ll face the same fact-bound inquiry discussed above. It’s hard to imagine, though, that moving or removal of the stand would be prohibitively expensive.
If the walkways and/or stand lie entirely on Nancy’s property, so that they can be said to be improvements of Nancy’s land, then we’re in the Somerville v. Jacobs realm. You could cite the majority opinion (where the court decided that the improving trespasser, here Marty, can force a sale of the land if the owner chooses not to pay the encroacher the court-determined value of the improving structure) or the dissent (holding that each side should be given the right to tear down the structure, leading – hopefully – to ex post bargaining).
The major focus of this problem was adverse possession, and a fine answer need not have spent much time at all on the encroachment issue except perhaps to note that the value involved was quite limited. I leave it to you think about what, if anything, to do about the
benefits Marty has conferred on the caverns through mapping, development, and publicity. Is it fair, if he cannot take by adverse possession, to permit Nancy to reap those benefits?
Marengo Cave Co. v. Ross,
10 N.E.2d 917 (Ind. 1937)
John H. Luckett, of English, and Walter Bulleit, of New Albany, for appellant.
Connor D. Ross, of Indianapolis, and H. W. Mock, of English, for appellee.
Appellee and appellant were the owners of adjoining land in Crawford county, Ind. On appellant’s land was located the opening to a subterranean cavity known as ‘Marengo Cave.’ This cave extended under a considerable portion of appellant’s land, and the southeastern portion thereof extended under lands owned by appellee. This action arose out of a dispute as to the ownership of that part of the cave that extended under appellee’s land. Appellant was claiming title to all the cave and davities, including that portion underlying appellee’s land. Appellee instituted this action to quiet his title as by a general denial and filed a cross-complaint by a general denial and filed a crosscomplaint wherein he sought to quiet its title to all the cave, including that portion underlying appellee’s land. There was a trial by jury which returned a verdict for the appellee. Appellant filed its motion for a new trial which was overruled by the court, and this the only error assigned on appeal. Appellant assigns as grounds for a new trial that the verdict of the jury is not sustained by sufficient evidence, and is contrary to law. These are the only grounds urged for a reversal of this cause.
The facts as shown by the record are substantially as follows: In 1883 one Stewart owned the real estate now owned by appellant, and in September of that year some young people who were upon that land discovered what afterwards proved to be the entrance to the cavern since known as Marengo Cave, this entrance being approximately 700 feet from the boundary line between the lands now owned by appellant and appellee, and the only entrance to said cave. Within a week after discovery of the cave, it was explored, and the fact of its existence received wide publicity through newspaper articles, and otherwise. Shortly thereafter the then owner of the real estate upon which the entrance was located took complete possession of the entire cave as now occupied by appellant and used for exhibition purposes, and began to charge an admission fee to those who desired to enter and view the cave, and to exclude therefrom those who were unwilling to pay for admission. This practice continued from 1883, except in some few instances when persons were permitted by the persons claiming to own said cave to enter same without payment of the usual required fee, and during the following years the successive owners of the land upon which the entrance to the cave was located, advertised the existence of said cave through newspapers, magazines, posters, and otherwise, in order to attract visitors thereto; also made improvements within the cave, including the building of concrete walks, and concrete steps where there was a difference in elevation of said cavern, widened and heightened portions of passageways; had available and furnished guides, all in order to make the cave more easily accessibly to visitors desiring to view the same; and continuously, during all this time, without asking or obtaining consent from any one, but claiming a right so to do, held and possessed said subterranean passages constituting said cave, excluding therefrom the ‘whole world,’ except such persons as entered after paying admission for the privilege of so doing, or by permission.
Appellee has lived in the vicinity of said cave since 1903, and purchased the real estate which he now owns in 1908. He first visited the cave in 1895, paying an admission fee for the privilege, and has visited said cave several times since. He has never, at any time, occupied or been in possession of any of the subterranean passages or cavities of which the cave consists, and the possession and use of the cave by those who have done so has never interfered with his use and enjoyment of the lands owned by him. For a period of approximately 25 years prior to the time appellee purchased his land, and for a period of 21 years afterwards, exclusive possession of the cave has been held by appellant, its immediate and remote grantors.
The cave, as such, has never been listed for taxation separately from the real estate wherein it is located, and the owners of the respective tracts of land have paid the taxes assessed against said tracts.
A part of said cave at the time of its discovery and exploration extended beneath real estate now owned by appellee, but this fact was not ascertained until the year 1932, when the boundary line between the respective tracts through the cave was established by means of a survey made by a civil engineer pursuant to an order of court entered in this cause. Previous to this survey neither of the parties to this appeal, nor any of their predecessors in title, knew that any part of the cave was in fact beneath the surface of a portion of the land now owned by appellee. Possession of the cave was taken and held by appellant’s remote and immediate grantors, improvements made, and control exercised, with the belief on the part of such grantors that the entire cave as it was explored and held was under the surface of lands owned by them. There is no evidence of and dispute as to ownership of the cave, or any portion thereof, prior to the time when in 1929 appellee requested a survey, which was approximately 46 years after discovery of the cave and the exercise of complete dominion thereover by appellant and its predecessors in title.1
It is appellant’s contention that it has a fee-simple title to all of the cave; that it owns that part underlying appellee’s land by adverse possession.Section 2-602, Burns’ Ann.St.1933, section 61, Baldwin’s Ind.St.1934, provides as follows: ‘The following actions shall be commenced within the periods herein prescribed after the cause of action has accrued, and not afterward: * * * Sixth. Upon contracts in writing other than those for the payment of money, on judgments of courts of record, and for the recovery of the possession of real estate, within twenty (20) years.’
It will be noted that appellee nor his predecessors in title had never effected a severance of the cave from the surface estate. Therefore the title of the appellee extends from the surface to the center but actual possession is confined to the surface. Appellee and his immediate and remote grantors have been in possession of the land and estate here in question at all times, unless it can be said that the possession of the cave by appellant as shown by the evidence above set out has met all the requirements of the law relating to the acquisition of land by adverse possession. A record title may be defeated by adverse possession. All the authorities agree that, before the owner of the legal title can be deprived of his land by another’s possession, through the operation of the statute of limitation, the possession must have been actual, visible, notorious, exclusive, under claim of ownership and hostile to the owner of the legal title and to the world at large (except only the government), and continuous for the full period prescribed by the statute. The rule is not always stated in exactly the same words in the many cases dealing with the subject of adverse possession, yet the rule is so thoroughly settled that there is no doubt as to what elements are essential to establish a title by adverse possession. Craven v. Craven (1913) 181 Ind. 553, 103 N.E. 333,105 N.E. 41; Rennert v. Shirk (1904) 163 Ind. 542, 72 N.E. 546;Vandalia R. Co. v. Wheeler (1914) 181 Ind. 424, 103 N.E. 1069; Tolley v. Thomas (1910) 46 Ind.App. 559, 93 N.E. 181; McBeth v. Wetnight (1914) 57 Ind.App. 47, 106 N.E. 407. Let us examine the various elements that are essential to establish title by adverse possession and apply them to the facts that are established by the undisputed facts in this case.
(1) The possession must be actual. It must be conceded that appellant in the operation of the ‘Marengo Cave’ used not only the cavern under its own land but also that part of the cavern that underlaid appellee’s land, and assumed dominion over all of it. Yet it must also be conceded that during all of the time appellee was in constructive possession, as the only constructive possession known to the law is that which inheres in the legal title and with which the owner of that title is always endowed. Morrison v. Kelly (1859) 22 Ill. 609, 610, 74 Am.Dec. 169; Cook v. Clinton (1887) 64 Mich. 309, 31 N.W. 317,8 Am.St.Rep. 816; Ables v. Webb (1905) 186 Mo. 233, 85 S.W. 383, 105 Am.St.Rep. 610;1 R.C.L. 692; 2 C.J. 51 et seq. and authorities there cited. Whether the possession was actual under the peculiar facts in this case we need not decide.
(2) The possession must be visible. The owner of land who, having notice of the fact that it is occupied by another who is claiming dominion over it, nevertheless stands by during the entire statutory period and makes no effort to eject the claimant or otherwise protect his title, ought not to be permitted, for reasons of public policy, thereafter to maintain an action for the recovery of his land. But, the authorities assert, in order that the possession of the occupying claimant may constitute notice in law, it must be visible and open to the common observer so that the owner or his agent on visiting the premises might readily see that the owner’s rights are being invaded. Holcroft v. Hunter (1832) 3 Blackf. 147; Towle v. Quante (1910) 246 Ill. 568, 92 N.E. 967; Tinker v. Bessel (1912) 213 Mass. 74, 99 N.E. 946; Jasperson v. Scharnikow (1907) 150 F. 571, 80 C.C.A. 373, 15 L.R.A. (N.S.) 1178 and note. What constitutes open and visible possession has been stated in general terms, thus; it is necessary and sufficient if its nature and character is such as is calculated to apprise the world that the land is occupied and who the occupant is; Dempsey v. Burns (1917) 281 Ill. 644, 118 N.E. 193, and such an appropriation of the land by claimant as to apprise, or convey visible notice to the community or neighborhood in which it is situated that it is in his exclusive use and enjoyment. Goodrich v. Mortimer (1919) 44 Cal.App. 576, 186 P. 844. It has been declared that the disseisor ‘must unfurl his flag’ on the land, and ‘keep it flying,’ so that the owner may see, if he will, that an enemy has invaded his domains, and planted the standard of conquest. Robin v. Brown (1932) 308 Pa. 123, 162 A. 161; Willamette Real Estate Co. v. Hendrix (1895) 28 Or. 485, 42 P. 514,52 Am.St.Rep. 800; People’s Savings Bank v. Bufford (1916) 90 Wash. 204, 155 P. 1068; 1 Amer.Juris. p. 865.
(3) The possession must be open and notorious. The mere possession of the land is not enough. It is knowledge, either actual or imputed, of the possession of his lands by another, claiming to own them bona fide and openly, that affects the legal owner thereof. Where there has been no actual notice, it is necessary to show that the possession of the disseisor was so open, notorious, and visible as to warrant the inference that the owner must or should have known of it. In Philbin v. Carr (1920) 75 Ind.App. 560, 129 N.E. 19, 29, 706, it was said:
However, in order that the possession of the occupying claimant may constitute notice in law, it must be visible and open to the common observer so that the owner or his agent on visiting the premises might readily see that the owner’s rights are being invaded. In accordance with the general rule applicable to the subject of constructive notice, before possession can operate as such notice, it must be clear and unequivocal.
Holcroft v. Hunter (1832) 3 Blackf. 147; Towle v. Quante supra.
And again, the possession must be notorious. It must be so conspicuous that it is generally known and talked of by the public. ‘It must be manifest to the community.’ Thus, the Appellate Court said in Philbin v. Carr supra, that:
Where the persons who have passed frequently over and along the premises have been unable to see any evidence of occupancy, evidently the possession has not been of the character required by the rule. The purpose of this requirement is to support the principle that a legal title will not be extinguished on flimsy and uncertain evidence. Hence, where there has been no actual notice, the possession must have been so notorious as to warrant the inference that the owner ought to have known that a stranger was asserting dominion over his land. Insidious, desultory, and fugitive acts will not serve that purpose. To have that effect the possession should be clear and satisfactory, not doubtful and equivocal.
See cases there cited on page 585 of 75 Ind.App.,129 N.E. 19, 28, 706.
(4) The possession must be exclusive. It is evident that two or more persons cannot hold one tract of land adversely to each other at the same time.
It is essential that the possession of one who claims adversely must be of such an exclusive character that it will operate as an ouster of the owner of the legal title; because, in the absence of ouster the legal title draws to itself the constructive possession of the land. A possession which does not amount to an ouster or disseisin is not sufficient.
Philbin v. Carr, supra. See cases cited on page 585 of 75 Ind.App.,129 N.E. 19, 28, 706.
The facts as set out above show that appellee and his predecessors in title have been in actual and continuous possession of his real estate since the cave was discovered in 1883. At no time were they aware that any one was trespassing upon their land. No one was claiming to be in possession of appellee’s land. It is true that appellant was asserting possession of the ‘Marengo Cave.’ There would seem to be quite a difference in making claim to the ‘Marengo Cave,’ and making claim to a portion of appellee’s land, even though a portion of the cave extended under appellee’s land, when this latter fact was unknown to any one. The evidence on both sides of this case is to the effect that the ‘Marengo Cave’ was thought to be altogether under the land owned by appellant, and this erroneous supposition was not revealed until a survey was made at the request of appellee and ordered by the court in this case. It seems to us that the following excerpt from Lewey v. H. C. Frick Coke Co. (1895) 166 Pa. 536, 31 A. 261, 263,28 L.R.A. 283, 45 Am.St.Rep. 684, is peculiarly applicable to the situation here presented, inasmuch as we are dealing with an underground cavity. It was stated in the above case:
The title of the plaintiff extends from the surface to the center, but actual possession is confined to the surface. Upon the surface he must be held to know all that the most careful observation by himself and his employes could reveal, unless his ignorance is induced by the fraudulent conduct of the wrongdoer. But in the coal veins, deep down in the earth, he cannot see. Neither in person nor by his servants nor employes can he explore their recesses in seach for an intruder. If an adjoining owner goes beyond his own boundaries in the course of his mining operations, the owner on whom he enters has no means of knowledge within his reach. Nothing short of an accurate survey of the interior of his neighbor’s mines would enable him to ascertain the fact. This would require the services of a competent mining engineer and his assistants, inside the mines of another, which he would have no right to insist upon. To require an owner, under such circumstances, to take notice of a trespass upon his underlying coal at the time it takes place, is to require an impossibility; and to hold that the statute begins to run at the date of the trespass is in most cases to take away the remedy of the injured party before he can know that an injury has been done him. A result so absurd and so unjust ought not to be possible. * * *
The reason for the distinction exists in the nature of things. The owner of land may be present by himself or his servants on the surface of his possessions, no matter how extensive they may be. He is for this reason held to be constructively present wherever his title extends. He cannot be present in the interior of the earth. No amount of vigilance will enable him to detect the approach of a trespasser who may be working his way through the coal seams underlying adjoining lands. His senses cannot inform him of the encroachment by such trespasser upon the coal that is hidden in the rocks under his feet. He cannot reasonably be held to be constructively present where his presence is, in the nature of things, impossible. He must learn of such a trespass by other means than such as are within his own control, and, until these come within his reach, he is necessarily ignorant of his loss. He cannot reasonably be required to act until knowledge that action is needed is possible to him.
We are not persuaded that this case falls within the rule of mistaken boundary as announced in Rennert v. Shirk (1904) 163 Ind. 542, 72 N.E. 546, 549, wherein this court said:
Appellant insists, however, that, if one takes and holds possession of real estate under a mistake as to where the true boundary line is, such possession cannot ripen into a title. In this state, when an owner of land, by mistake as to the boundary line of his land, takes actual, visible, and exclusive possession of another’s land, and holds it as his own continuously for the statutory period of 20 years, he thereby acquires the title as against the real owner. The possession is regarded as adverse, without reference to the fact that it is based on mistake; it being prima facie sufficient that actual, visible, and exclusive possession is taken under a claim of right.
The reason for the above rule is obvious. Under such circumstances appellant was in possession of the necessary means of ascertaining the true boundary line, and to hold that a mere misapprehension on the part of appellant as to the true boundary line would nullify the well-established law on adverse possession. In that case appellee had actual, visible, notorious, and exclusive possession. The facts in the present case are far different. Here the possession of appellant was not visible. No one could see below the earth’s surface and determine that appellant was trespassing upon appellee’s lands. This fact could not be determined by going into the cave. Only by a survey could this fact be made known. The same undisputed facts clearly show that appellant’s possession was not notorious. Not even appellant itself nor any of its remote grantors knew that any part of the ‘Marengo Cave’ extended beyond its own boundaries, and they at no time even down to the time appellee instituted this action made any claim to appellee’s lands. Appellee and his predecessors in title at all times have been in possession of the land which he is now claiming. No severance by deed or written instrument was ever made to the cave, from the surface. In the absence of a separate estate could appellant be in the exclusive possession of the cave that underlies appellee’s land.
‘If there is no severance, an entry upon the surface will extend downward, and draw to it a title to the underlying minerals; so that he who disseises another, and acquires title by the statute of limitations, will succeed to the estate of him upon whose possession he has entered.’ Delaware & Hudson Canal Co. v. Hughes (1897) 183 Pa. 66, 38 A. 568, 570,38 L.R.A. 826, 63 Am.St.Rep. 743.
Even though it could be said that appellant’s possession has been actual, exclusive, and continuous all these years, we would still be of the opinion that appellee has not lost his land. It has been the uniform rule in equity that the statute of limitation does not begin to run until the injured party discovers, or with reasonable diligence might have discovered, the facts constituting the injury and cause of action. Until then the owner cannot know that his possession has been invaded. Until he has knowledge, or ought to have such knowledge, he is not called upon to act, for he does not know that action in the premises is necessary and the law does not require absurd or impossible things of any one. Lewey v. Frick Coke Co. (1895) 166 Pa. 536, 31 A. 261,28 L.R.A. 283, 45 Am.St.Rep. 684; Delaware & Hudson Canal Co. v. Hughes, supra.
In the case of Bailey v. Glover (1874) 21 Wall. (88 U.S.) 342, 348, 22 L.Ed. 636, the court said:
We also think that in suits in equity the decided weight of authority is in favor of the proposition that where the party injured by the fraud remains in ignorance of it without any fault or want of diligence or care on his part, the bar of the statute does not begin to run until the fraud is discovered, though there be no special circumstances or efforts on the part of the party committing the fraud to conceal it from the knowledge of the other party. * * *
To hold that by concealing a fraud, or by committing a fraud in a manner that it concealed itself until such time as the party committing the fraud could plead the statute of limitations to protect it, is to make the law which was designed to prevent fraud the means by which it is made successful and secure.
In Livingston v. Rawyards (1880) L.R. 5 App.Cas. 34, Lord Hatherly treats an underground trespass as a species of fraud. While there is no active fraud shown in this case, yet the facts come clearly within the case of Lightner Mining Co. v. Lane (1911) 161 Cal. 689, 120 P. 771, 776, and cases cited on page 776, Ann.Cas. 1913C, 1093. The following excerpt from this opinion clearly sets forth our view:
In the English decisions the willful and secret taking of coal from a neighbor’s mine is usually characterized as fraudulent. Hilton v. Woods, L.R. 4 Eq.Cas. 440; Dean v. Thwaite, 21 Beav. 623; Ecclesiastical Coms. v. North E. Ry. Co., L.R. 4, Ch.Div. 860; Trotter v. McLean, L.R. 13, Ch.Div. 586. Such an act, so committed, has all the substantial elements of fraud. Where one by misrepresentation induces another knowingly to part with his property, because his mind is so beclouded by the falsehood that he is unaware of the wrong done him, it is called a fraud. It is a taking of another’s property without his knowledge of the fact that it is really taken from him. The ignorance in that case is produced by artifice. Where one betrays a trust and appropriates trust property to his own use, it is called a fraud. The injured party allows the other to have the possession and the opportunity to convert the property secretly, because of faith and confidence in the wrongdoer. In the case of underground mining of a neighbor’s ore, nature has supplied the situation which gives the opportunity to the trespasser to take it secretly and causes the ignorance of the owner. Relying upon this ignorance, he takes an unfair advantage of his natural opportunities, and thereby clandestinely appropriates another’s property while appearing to be making only a lawful use of his own. The act in its very nature constitutes the deceit which makes it a fraud.
So in the case at bar, appellant pretended to use the ‘Marengo Cave’ as his property and all the time he was committing a trespass upon appellee’s land. After 20 years of secret user, he now urges the statute of limitation, section 2-602, Burns’ St.1933, section 61, Baldwin’s Ind.St.1934, as a bar to appellee’s action. Appellee did not know of the trespass of appellant, and had no reasonable means of discovering the fact. It is true that appellant took no active measures to prevent the discovery, except to deny appellee the right to enter the cave for the purpose of making a survey, and disclaiming any use of appellee’s lands, but nature furnished the concealment, or where the wrong conceals itself. It amounts to the taking of another’s property without his knowledge of the fact that it is really being taken from him. In most cases the ignorance is produced by artifice. But in this case nature has supplied the situation which gives the trespasser the opportunity to occupy the recesses on appellee’s land and caused the ignorance of appellee which he now seeks to avail himself. We cannot assent to the doctrine that would enable one to trespass upon another’s property through a subterranean passage and under such circumstances that the owner does not know, or by the exercise of reasonable care could not know, of such secret occupancy, for 20 years or more and by so doing obtained a fee-simple title as against the holder of the legal title. The fact that appellee had knowledge that appellant was claiming to be the owner of the ‘Marengo Cave,’ and advertised it to the general public, was no knowledge to him that it was in possession of appellee’s land or any part of it. We are of the opinion that appellant’s possession for 20 years or more of that part of ‘Marengo Cave’ underlying appellee’s land was not open, notorious, or exclusive, as required by the law applicable to obtaining title to land by adverse possession.
We cannot say that the evidence is not sufficient to support the verdict or that the verdict is contrary to law.
- The above facts are quoted from Appellate Court’s opinion. See 7 N.E.(2d) 59.