SHARP v. RIEKHOF

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Docket Number

No. 20117.

Attorney(S)

Richard D. Lamborn, Salt Lake City, for defendants and appellants. Bruce J. Nelson, Salt Lake City, for plaintiffs and respondents.

Judges

PER CURIAM:

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Smart Summary

Factual and Procedural Background

This appeal arises from a summary judgment and order quieting title to real property in favor of the respondents. On October 2, 1979, AFCO Development Corporation deeded real property in Salt Lake County to the "Bryner Clinic Employees' Profit Sharing and Pension Trusts," with respondents paying $100,000 as consideration. The deed was recorded on October 4, 1979. In December 1981, appellant obtained a judgment against AFCO. To remove any cloud on their title, respondents initiated this action in 1983. Appellant challenged the validity of the 1979 deed, alleging it was a nullity because a trust, which appellant argued cannot hold title, was named as grantee. The trial court granted summary judgment quieting title in the respondents, holding that the deed's naming of the trust was not a material defect, and appellant's judgment did not attach to the property. The appellant appealed that ruling.

Legal Issues Presented

Whether a deed naming a trust as grantee, where the trust is not a legal entity capable of holding title, constitutes a valid conveyance of property.
Whether the naming of the trust as grantee was a material defect invalidating the deed.
Whether the trial court erred in granting summary judgment quieting title in respondents despite appellant's judgment against AFCO.

Arguments of the Parties

Appellant's Arguments

The grantee of a deed must be a natural or artificial person capable of taking and holding title to property.
The 1979 deed naming the trust as grantee is void because a trust is a property interest and not an entity capable of holding title.
Accordingly, the deed is a nullity and conveys no priority to respondents.

Respondents' Arguments

The deed's naming of the trust, even if incorrect, was not a material defect because extrinsic evidence identified the intended grantee.
The respondents considered the deed to be jointly owned by two trusts for which they served as trustees.
The appellant's judgment did not attach to the property because the deed was recorded more than two years before the judgment and because AFCO had no interest in the property at the time of judgment.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Nilson v. Hamilton, 53 Utah 594, 174 P. 624 (1918)	Deed naming a nonentity (such as deceased person or estate) as grantee is void because such entities cannot hold title.	The court applied this principle to hold the trust named as grantee was a nonentity incapable of holding title, rendering the deed void.
Rixford v. Zeigler, 150 Cal. 435, 88 P. 1092 (1907)	A deed is void unless the grantee is a natural or artificial person capable of taking and holding property.	The court cited this precedent to reinforce that the deed naming a trust (nonentity) as grantee was ineffective.
Burns v. Grable, 138 Cal.App.2d 280, 291 P.2d 969 (1956)	Grantee must be capable of taking and holding title; attempted conveyances to incapable entities are nullities.	Appellant relied on this case to argue the deed was null; the court agreed with the underlying legal principle.

Court's Reasoning and Analysis

The court analyzed whether the naming of the trust as grantee constituted a material defect invalidating the deed. It acknowledged the principle that a deed must name a grantee capable of holding title—either a natural or artificial person. Since a trust is a property interest and not a legal entity, it cannot hold title directly. The court relied on established precedent, including Nilson v. Hamilton and Rixford v. Zeigler, to conclude that a deed naming a nonentity as grantee is void. The trial court's prior conclusion that the defect was not material was incorrect because the deed conveyed no interest. The court noted that the trial court had not addressed respondents' alternative claim for reformation of the deed, which remains to be determined on remand. Therefore, the summary judgment quieting title in respondents was vacated and the case remanded for further proceedings on the reformation claim.

Holding and Implications

The summary judgment quieting title in respondents is VACATED.

The court held that a deed naming a trust as grantee, where the trust is not a legal entity capable of holding title, is void and conveys no interest. The case was remanded for determination of respondents' claim for reformation of the deed. The decision directly affects the parties by invalidating the prior summary judgment and permitting further litigation on reformation, but it does not establish new precedent beyond reaffirming existing principles regarding valid grantees in property conveyances.

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HOWARD C. SHARP, MAX W. STEELE AND STEVEN W. BERGSTEDT, TRUSTEES OF THE BRYNER CLINIC EMPLOYEES PROFIT SHARING AND PENSION TRUST, PLAINTIFFS AND RESPONDENTS, v. F. TEMPEL RIEKHOF, AFCO DEVELOPMENT CORPORATION, FRANK K. STUART, TRUSTEE, DAVID S. TAYLOR, McKEAN CONSTRUCTION COMPANY, MAX A. BARNETT, ELSIE J. BARNETT, VERNON O. ANDERSON, MAXINE D. ANDERSON, TROY AUER KEHL, EDWARD F. KEHL, SALLY ANN KEHL, EXECUTONE MOUNTAINWEST, INC., UNITED BANK, JOHN DOES I THROUGH X, AND ANY AND ALL OTHER PERSONS WHO MAY CLAIM ANY INTEREST IN THE SUBJECT OF THIS ACTION, DEFENDANTS AND APPELLANTS.

PER CURIAM:

This is an appeal from a summary judgment and order quieting title to real property in respondents.

The underlying facts of this case are undisputed. On October 2, 1979, AFCO Development Corporation deeded real property in Salt Lake County to the "Bryner Clinic Employees' Profit Sharing and Pension Trusts." As consideration for the deed, respondents paid AFCO $100,000. The deed was recorded on October 4, 1979. On December 18, 1981, appellant obtained a judgment against AFCO. To remove the potential cloud on their title, respondents initiated this action in 1983. Appellant answered alleging, inter alia, that the 1979 deed is a nullity since a trust was named as grantee and a trust is not capable of taking and holding title to property.

Other judgment creditors of AFCO were also joined as party-defendants. All of the other defendants have either executed a disclaimer of interest in the property or have defaulted by failing to answer the complaint.

Respondents filed a motion for summary judgment, urging that they were entitled to judgment as a matter of law. Based upon various documents (including an affidavit) and memoranda on file, the trial court found as follows: the "Bryner Clinic Employees Profit Sharing Plan" was organized in 1968, and the "Bryner Clinic, Inc. Employees Pension Trust" was organized in 1977; Howard C. Sharp, Max W. Steele, and Steven W. Bergstedt are the trustees for both entities; and the deed to "Bryner Clinic Employees' Profit Sharing and Pension Trusts" was considered by respondents to be jointly owned by the two entities for which they served as trustees. The court concluded that the actual name of the grantee, if incorrect, was not a material defect as to invalidate the deed since "[s]ufficient extrinsic evidence exists to allow proper identification of the intended grantee." The court thereupon granted respondents' motion for summary judgment, quieting title to "Howard C. Sharp, Max W. Steele and Steven W. Bergstedt, Trustees of the Bryner Clinic Employees Profit Sharing Plan" and "Howard C. Sharp, Max W. Steele and Steven W. Bergstedt, Trustees of the Bryner Clinic, Inc. Employees Pension Trust" as tenants in common. Appellant's judgment was held not to have attached to the property since the deed was recorded more than two years prior to the date of judgment and because at the time the judgment was entered, AFCO had no interest in the property. On appeal, appellant requests that this Court reverse and hold that the 1979 deed is a nullity conveying no priority to respondents.

Appellant argues that the grantee of a deed must be a natural or artificial person capable of taking and holding title to property, Burns v. Grable, 138 Cal.App.2d 280, 291 P.2d 969 (1956), and that if no such person exists, attempted conveyances are deemed "mere nullities." Nilson v. Hamilton, 53 Utah 594, 174 P. 624 (1918). He claims that trusts are property interests which cannot hold property. We agree and vacate the summary judgment.

An attempted conveyance of land to a nonexisting entity is void. See Nilson v. Hamilton, 53 Utah at 600, 174 P. at 626, where we held that a deed which named a deceased person or his estate as a grantee was void because neither the estate nor the deceased person was a legal entity. See also Rixford v. Zeigler, 150 Cal. 435, 88 P. 1092, 1093 (1907), where it is said:

[A] deed of conveyance is void unless the grantee named is capable of taking and holding the property named in the deed; and the general rule also is that to make a deed effective the grantee must be a person, either natural or artificial, capable of taking and holding the property.

Since the deed here named a nonentity as the grantee, we cannot agree with the trial court that the deed did not contain "a material defect." The deed conveyed no interest whatever.

Respondents, in their amended complaint, sought as alternative relief reformation of the deed so as to substitute the trustees as the grantees of the deed. However, the trial court did not reach the claim for reformation or make any ruling thereon since it incorrectly concluded that the naming of the trust as the grantee was not a material defect. Because the grantee was a nonentity, the defect was material.

The summary judgment quieting title in respondents is vacated, and the case is remanded to the trial court for a determination of respondents' claim for reformation, subject to any defenses appellant may raise thereto.

DURHAM, J., having disqualified herself, does not participate herein.