Bergum v. Musselshell County, 2016 MT 47 (March 1, 2016) (McKinnon, J.; Baker, J., concurring) (5-0, aff’d)
Issue: (1) Whether the district court erred in concluding the statute of limitations in § 2214, RCM (1935) barred Bergum’s quiet title action, and (2) whether the district court erred in denying Musselshell County its attorney fees under § 25-7-105, MCA.
Short Answer: (1) No, and (2) no.
Facts: This case involves the disputed ownership of subsurface mineral rights to 320.58 acres of coal-rich land in Musselshell County. In 1908, Lincoln and Annie Westcott received patents for adjacent parcels of 160 and 160.58 acres, for which they paid $1,600 and $1,605.80 respectively. Lincoln then conveyed his patented 160 acres to Annie.
In 1935, Annie conveyed the property to Charles Wilson. County taxes on the property were not paid in 1936 and the County Assessor listed the taxes as delinquent. The taxes remained delinquent until 1941, when Charles Wilson paid a portion of the taxes owed and redeemed the property. The certificate of redemption, dated March 5, 1941, describes the property redeemed and states “surface rights only.” The property’s subsurface rights were severed from the surface rights at this point. On the same day, Charles Wilson conveyed his interest in the property to E.K. and E.C. Woodley.
The subsurface rights were not redeemed in 1941, and remained delinquent until 1945, and were listed under Charles Wilson’s name. In 1945, Musselshell County applied for a tax deed. Affidavits of service verify that the county provided notice of an impending tax sale by publication and by registered mail. The county held a tax sale in 1946 and purchased the subsurface rights for $251.32. The county treasurer issued a tax deed to the county on Feb. 5, 1946, for the property “less surface which has been redeemed.”
In 1945, the Woodleys conveyed their interest to Francis, Murry, and Jim Brown, after which Jim and Murry conveyed their interests to Francis. In 1950, Francis conveyed his interest to Roy and Ethel Gentry, and attempted to retain a 50% mineral interest in the property. The Gentrys filed a quiet title action in 1955. Title was quieted in their favor in January 1, with an exception listed for Musselshell County’s subsurface rights. Francis Brown, who claimed to have retained a mineral right of entry, was not named a party to this proceeding.
In 2007, Bergum filed suit against Musselshell County to quiet title as successor in interest to Francis’s mineral right of entry. The parties filed cross-motions for summary judgment, and the court held a hearing.
Procedural Posture & Holding: On Oct. 3, 2012, the district court granted Musselshell County’s motion for summary judgment. In April 2015, the district court awarded the county costs but not attorney fees, and entered final judgment for the county. Bergum appeals, the county cross-appeals on the issue of attorney fees, and the Supreme Court affirms.
Reasoning: (1) Bergum challenged the sufficiency of the tax deed procedure used by the county to purchase the subsurface rights in 1946. The district court held that the statute of limitations barred Bergum’s action. The law applicable at the time the taxes were assessed and the sale occurred determines the validity of the taxes and procedure used. The 1935 Revised Code of Montana, § 2214, provided for a one-year statute of limitations to challenge a tax deed, unless one of two exceptions applies – either no taxes were delinquent in the first place, or redemption was made from the tax sale. The Court reviews each exception and affirms the district court’s conclusion that neither applies.
(2) Section 25-7-105(4)(b) allows for a prevailing party to recover attorney fees if the party makes a written offer of settlement, the final judgment is less favorable to the offeree than the offer, the amount of the claim is $50,000 or less, and the claim involves real property. Begum offered $5 to the county on De. 7, 2011, in exchange for its consent to quiet title in her favor. The county responded on Dec. 21, 2011 by offering “a one-pound lump of coal, suitable for placement in a Christmas stocking.” The district court held that the value of the subsurface rights is less than $50,000 and denied the county’s motion for attorney fees. The county argues the district court erred by not holding a hearing to make that determination, but The Court finds that the county never requested a hearing.
Justice Baker’s Concurrence: Justice Baker would conclude that a taxpayer’s challenge to the constitutionality of a county’s tax assessment is not within the first exception to § 2214, R.C.M. (1935), and that the second exception does not save Bergum’s claims as they are premised on the alleged illegality of the county’s action in allowing Wilson to redeem the surface rights only.
On the second issue, Justice Baker would hold that in order to obtain the benefit of attorney’s fees under the statute, a party must make a legitimate, good-faith offer of settlement. Because the county’s offer does not meet that standard, she would affirm the district court’s decision denying the county attorney fees.