Thursday, June 11, 2009

To Acknowledge or Not to Acknowledge

I received a settlement demand today from an attorney who argued that the disputed lease was unenforceable because it was not acknowledged pursuant to RCW 64.04.020. This statute provides that “[e]very deed shall be in writing, signed by the party bound thereby, and acknowledged by the party before some person authorized by this act to take acknowledgments of deeds.”

Yet, courts in Washington have generally held that an unacknowledged deed or mortgage is valid between the parties. Skagit State Bank v. Rasmussen, 109 Wn. 2d 377 (1987). It is true that a county recorder is under no duty to record an unacknowledged deed. Eggert v. Ford, 21 Wn. 3d 152, 154 (1944). However, if it is recorded, an unacknowledged deed will impart the same notice to third persons, from the date of recording, as if the instrument has been executed and acknowledged as required by law. RCW 65.080.030.

This makes sense. In conveyances of real property, legal title passes from Seller to Buyer for consideration, i.e., money. There is often a mortgage and old liens are paid off. A lot of moving parts. Suppose a parcel of real estate is sold through financing but somehow the lender's Deed of Trust was not notarized. (See note on acknowledgement). Recording the Deed of Trust gives notice to the world that the property is mortgaged and that, upon default, the proceeds from a foreclosure will be paid in the order that the liens were filed. It would be an injustice to disallow a valid claim because the Deed was not notarized. It has long been established that partial performance takes the parties out of the statute of frauds.

What does that mean? the Washington State Supreme Court has long held that an agreement to convey an estate in real property, though required by RCW 64.04.010 and 64.04.020 to be in writing with the formal requisites specified for a deed, may be proved without a writing, given sufficient part performance; and that specific performance will be granted where the acts allegedly constituting the part performance point unmistakably and exclusively to the existence of the claimed agreement. See, e.g., Mobley v. Harkins, 14 Wn.2d 276, 128 P.2d 289, 143 A.L.R. 88 (1942); Richardson v. Taylor Land & Livestock Co., 25 Wn.2d 518, 171 P.2d 703 (1946); Granquist v. McKean, 29 Wn.2d 440, 187 P.2d 623 (1947); Ormiston v. Boast, 68 Wn.2d 548, 413 P.2d 969 (1966); Ferguson v. McBride, 69 Wn.2d 35, 416 P.2d 464 (1966); Beckendorf v. Beckendorf, 76 Wn.2d 457, 457 P.2d 603 (1969). This, the doctrine of partial performance, exists as a means of removing an oral contract for the lease or sale of real property from the statute of frauds. The doctrine requires at least two of the following elements:

(1) delivery and assumption of actual and exclusive possession;

(2) payment or tender of consideration; and

(3) the making of permanent, substantial and valuable improvements, referable to the contract. Powers v. Hastings, 93 Wn.2d 709, 717, 612 P.2d 371 (1980).

The part performance doctrine also applies to written agreements failing to satisfy the statute of frauds. 2 A. Corbin, Contracts § 420, at 452-53 (1950) ("Being sufficient to enable the plaintiff to prove all the terms of an oral contract, it is necessarily sufficient to allow the use of oral testimony to supplement an existing memorandum that is deficient in some material respect."). Kruse v. Hemp, 121 Wn.2d 715, 724-25, 853 P.2d 1373 (1993).

Thus, even though a lease is technically a conveyance and the Statute of Frauds applies, that the lease was not notarized means nothing. As a common practice, business leases are never recorded. They are not recorded because they do not involve mortgages subject to foreclosures. There are rarely competing security interests. Thus, why record them? Even if they were recorded, case law is clear that a breaching party can not escape liability just because of a simple notary defect. Further, the court can look to the performance of the parties to determine whether a conveyance or a contract existed, in this case a lease.

I guess opposing counsel thought I just fell off a turnip truck. Bizarre expression.

Note on acknowledgments:

RCW 64.08.010
Who may take acknowledgments.

Acknowledgments of deeds, mortgages and other instruments in writing, required to be acknowledged may be taken in this state before a justice of the supreme court, or the clerk thereof, or the deputy of such clerk, before a judge of the court of appeals, or the clerk thereof, before a judge of the superior court, or qualified court commissioner thereof, or the clerk thereof, or the deputy of such clerk, or a county auditor, or the deputy of such auditor, or a qualified notary public, or a qualified United States commissioner appointed by any district court of the United States for this state, and all said instruments heretofore executed and acknowledged according to the provisions of this section are hereby declared legal and valid.

Wednesday, June 10, 2009

Fee Simple Absolute

I read a case today that stands for the proposition that a court will construe a deed of conveyance as a fee simple absolute and not a lesser estate unless there is language in the deed that clearly states otherwise. King County v. Hanson Inv. Co, 34 Wn. 2d 114 (1949).

It had been since law school that I had thought about fee simples. But, in law school, a great deal of time was wasted on it. The great legal authority of modern times, Wikipedia, had this to say: "If previous grantors of a fee simple estate do not create any conditions for subsequent grantees to own the conveyed property in fee simple title, which is commonly the case these days, then the title is called fee simple absolute. Other fee simple estates in real property include fee simple defeasible (or fee simple determinable) estates. A defeasible estate is created when a grantor places a condition on a fee simple estate. Upon the happening of a specified event, the estate may become void or subject to annulment. Two types of defeasible estates are the fee simple determinable and the fee simple subject to a condition subsequent. If the grantor uses durational language in the condition such as "to A as long as the land is used for a park" then upon the happening of the specified event, the estate will automatically terminate and revert to the grantor or the grantor's estate; this is called a fee simple determinable. If the grantor uses language such as "but if alcohol is served" then the grantor or the heirs have a right of entry, but the estate does not automatically revert to the grantor; this is a fee simple subject to a condition subsequent. In the United States many of these concepts have been modified by statute in some states."

That last sentence encapsulates the difference between the practice of law and the study of law in most American law schools. We spent hours parsing different types of estate interests. I suppose the point was made but I recall those sessions as being agonizing. As between listening to my property professor quizzing us about future interests or eating glass, I'd just ask that the glass be ground fine and served with a martini. In Washington, the rules are laid out in the Revised Code of Washington, most notably Chapters 64 and 65. In my practice, I have never seen a "fee simple determinable." We spent hours on the rules against perpetuities, yet the Revised Code of Washington abolished the rule. One little tidbit my trusts and estates professor omitteed. Same with the Rule in Shelley's case.

Alas, if only I knew then what I know now.

Thursday, June 4, 2009

Legal Messenger

Today, I felt like a legal messenger.  I had twittered yesterday that I thought e-file systems were great. I had noted that one could file court documents with the clerk's office via a web browser and even serve the other parties in the case.  This gives smaller firms the ability to reduce costs. 

I also indicated that Pierce County was light years ahead of King County on this.  I have orgal argument tomorrow on a case and was able to look up and read the briefs in opposition a day before I received the copies.  I was also able to file my responses after the clerk's office closed.  (That is ok, they were not due until today and they are logged as having been received on the next business day, i..e, today.)

Here is the glitch.  The system does not allow filing of Judge's working copies.  You have to deliver those the old fashioned way.  My office is 2 blocks from the court house so I decided to deliver the working copies in person.  

A beautiful day, I could not resist the urge to ride my bike from home to work.  With my prepared working copies tucked in my backpack, I rode gleefully downtown.  Bike messengers have go to be in great shape.  The only thing I was missing was a single speed bike and those jaunty, cycling caps they wear. 

I pulled up to work and the walked over to the courthouse in my shorts.  I passed a lawyer I have not seen in quite a few years but he did not recognize me.  To him, I was just a bike messenger.  To me, he was just a lawyer.  Which one of us has it figured out?  

Wednesday, June 3, 2009

Racing in the Heat

Last night, Tuesday, June 2nd, I rode from Tacoma to Pacific International Raceway out of Auburn, to compete in the weekly Tuesday night race.  For awhile now, the weather has been glorious in the Pacific Northwest but the thermometer has edged up over 75 degrees.  Of course, I acknowledge that if a Californian read that, he would bust a gut.  But, seriously, I don't know what that big round thing is up in the sky but it is too bright - and hot. 

Another thing I don't like about the heat is it causes wind.  Someone said that it was caused by the air warming and, apparently, warm air rises.  This creats a vacuum.  Whatever the cause, my two hour ride to PIR started to feel like those long days of suffering in July when you are trying to make it to Portland from Seattle or down from Crystal to Enumclaw after RAMROD. This is fine but a little unsettling when you are just trying to make it to Tuesday night race.  

In any event, the heat gave me a nice tail wind to Summer but a head wind when I turned North.  I was drained by the time I hit Lea Hill, which is actually three climbs.  Needless to say, I was tired by the time I got to the race. 

My whining aside, PIR races are awesome.  They are the single best way I know to start racing. The course is closed to traffic.  The lanes are wide and safe.  Not to say that there are not mishaps.  (Case in point this video depicting a crash.  PIR Video.  My buddy took that video with cameras both front and rear.)

It is never fun seeing a crash but the video shows the so called flat course really well and gives you and idea of what racing at PIR involves.  The video does not show the speeds very well.  Perhaps we really don't go that fast but it sure feels fast.  When I used to track such things, it was not uncommon to see speeds near 30 mph on portions of the flat course. 

Racing at PIR offers variety in the sense that the race directors will change the routes.  One possible course includes a fast descent followed by a gradual uphill that connects again with the flat course.  The cruel option is the reverse, a gradual but quick descent that culminates in a shorter but steeper uphill.  

As luck would have it, this, the steeper uphill course, was the designated course for racing when I finally made it to the course.  

When the race got underway, it was apparent that the heat was a factor immediately as the entire pack was far more lethargic than it was the last time we raced this course.  Everyone knew the uphill was the killer.  Sure enough, as we hit the hill, I felt it in my legs.  I have always heard the expression "didn't have the legs today" but it wasn't until I started racing that I truly got it.  Some days, for no reason, you just feel horrible.  The muscles literally don't want to work.  That was it.  My body was at impulse power only. 

I stayed with my peers for three laps but abandoned thereafter.  Too much for me. This is a lesson I have learned as I have aged as a rider.  Sometimes your training objectives should be limited and it you meet those objectives, it is often best to stop.  I have reached the point where I just enjoy the process rather than the results.  I have met great friends and enjoy seeing the same faces even if I don't really know everyone.  

I stayed to watch the finish of the races.    After the race, those who made it all had the same sentiment: "Gosh, its hot."