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Hull v. Pleasant Hill School District

Court of Appeals of Missouri, Western District, Second Division

June 6, 2017

JIM HULL AND NANCY HULL ET AL., Appellant-Respondents,

         Appeal from the Circuit Court of Cass County, Missouri Honorable William B. Collins, Judge

          Before: Thomas H. Newton, P.J., James Edward Welsh, and Karen King Mitchell, JJ.

          Thomas H. Newton, Presiding Judge

         Pleasant Hill School District appeals a Cass County circuit court judgment following a jury trial in an inverse-condemnation case. The jury found that flooding caused by improvements to the District's property and their operation had taken the entirety of a 46-acre golf course owned by Mr. Jim and Ms. Nancy Hull and awarded them $3 million in damages. The District challenges the Hulls' standing and asserts instructional error. On cross-appeal, the Hulls challenge the circuit court's denial of their bill of costs. We affirm the judgment and dismiss the cross appeal because it is premature.

          The Hulls testified that they had purchased the golf course from Mr. Hull's parents in 2005.[1] The Hulls reside on the golf course in a structure referred to as the clubhouse, part of which is used to conduct golf-course business. Beginning in 2007, when the District cleared and re-contoured a marshy, wooded area to create practice fields near the high school, stormwater and silt from the District's property started pouring onto the Hulls' adjacent nine-hole golf course rather than seeping onto it as before. The flooding overwhelmed the drainage systems that were in place on the Hulls' property to keep the golf course dry and its lakes clean and within their beds. Though the flooding did not cover the entire acreage, when it occurred, all nine holes could not be played and the greens were at risk from saturation. After bringing the situation to the District's attention, Mr. Hull was assured by the District's facilities director that efforts would be made to correct the problem. While promising the Hulls over the years that each new District construction project would address the flooding, the District actually exacerbated the problem by adding additional impervious surfaces to the District's property and directing new drainage pipes to empty near the golf course. As the flooding continued, compromising the golf-course infrastructure, the Hulls continued to try to work with the District to solve the problem.

         Finally disclaiming any responsibility, the District refused to further discuss the matter in 2013, and the Hulls filed an inverse-condemnation suit against the District in 2014. Following a four-day trial, the jury found that the District had totally and permanently taken the Hulls' property by inverse condemnation on October 16, 2013, and awarded them $3 million. The District had sought a partial-takings jury instruction (Missouri Approved Instruction 9.02), but the circuit court instead submitted the Hulls' proposed instruction based on MAI 4.01, allowing the jury to award them fair and just compensation if it found a total and permanent taking of their property. The circuit court entered its judgment on the verdict in October 2015 and further ordered the Hulls and Pleasant Hill Golf, Inc. to execute and deliver the property's title to the District.

         In its motions for judgment notwithstanding the verdict or for new trial, the District challenged, among other matters, the Hulls' standing and the circuit court's damages instruction. The Hulls submitted a bill of costs to the court clerk, requesting the addition of $13, 064 to the judgment under section 514.060.[2] Before the clerk could add costs to the judgment, the District filed a motion seeking court review of the bill of costs, claiming that, because the judgment failed to include costs, they could not be taxed against the District under section 514.200. The court denied the District's motions for judgment notwithstanding the verdict or for new trial from the bench and denied the Hulls' bill of costs. The District timely filed an appeal, and the Hulls timely filed a cross-appeal.

         Legal Analysis

         Whether a party has standing to bring a claim is a question of law that we review de novo. Manzara v. State, 343 S.W.3d 656, 659 (Mo. banc 2011). "To have standing, the party seeking relief must have 'a legally cognizable interest' and 'a threatened or real injury.'" Id. (quoting E. Mo. Laborers Dist. Council v. St. Louis Cnty., 781 S.W.2d 43, 46 (Mo. banc 1989). In the context of inverse condemnation, the owner of the property at the time the damage is ascertainable is the party entitled to bring the claim. State ex rel. City of Blue Springs v. Nixon, 250 S.W.3d 365, 370 (Mo. banc 2008). A damages claim "'based on inverse condemnation [does] not pass to subsequent grantees of the land.'" Id. (quoting Crede v. City of Oak Grove, 979 S.W.2d 529, 534 (Mo. App. W.D. 1998)).

         The District argues that the damages were ascertainable and the cause of action arose in 2007, the first time the golf course flooded. Because a deed recording the transfer of the golf-course property from the living trust of Mr. Hull's parents to the Hulls was not recorded until 2009, the District claims that the Hulls, as "subsequent grantees, " cannot bring a damages claim based on an inverse-condemnation theory. According to the District, sections 442.380 and 442.400 support its argument that, for purposes of proving ownership during an inverse-condemnation proceeding, a recorded deed is conclusive.

         Section 442.380 simply requires warranty deeds to be recorded; it states, "Every instrument that conveys any real estate, or whereby any real estate may be affected, in law or equity, proved or acknowledged and certified in the manner herein prescribed, shall be recorded in the office of the recorder of the county in which such real estate is situated." Section 442.400 states, "No such instrument in writing shall be valid, except between the parties thereto, and such as have actual notice thereof, until the same shall be deposited with the recorder for record." We agree with the Hulls that these statutes "have no bearing on when a cause of action for inverse condemnation accrues, nor do they have any bearing on when the actual transfer of the Property took place." See Hiler v. Cox, 109 S.W. 679, 682 (Mo. 1908) ("The record of a deed does not create title. It merely imparts notice of the title. As between the parties, the deed is good without recording"); see also Zumwalt v. Forbis, 163 S.W.2d 574, 577 (Mo. 1942) ("Recording is not essential in transferring title as between the parties themselves").

         In addition, our case law indicates that compliance with the recording statutes was not intended to prevent title from passing. Discussing the purpose of the recording statutes, our supreme court has stated, "The practical effect of section 442.400 is to postpone the effectiveness of an unrecorded instrument against a third party who does not have actual knowledge of the instrument." Bob DeGeorge Assocs., Inc. v. Hawthorn Bank, 377 S.W.3d 592, 597 (Mo. banc 2012). "Accordingly, the recording statutes serve to protect persons who acquire an interest in the real property without notice of prior encumbrances and to 'establish [] a system of statutory priorities' for encumbrances affecting the real property." Id. (citation omitted). This principle can be traced back to State ex rel. and to Use of Crites v. Short, 174 S.W.2d 821, 822 (Mo. 1943), where the supreme court indicated that a deed not properly acknowledged and recorded is not void; rather "there is no notice to subsequent purchasers and mortgagees." The court also stated, "The purpose of the section being to protect creditors and purchasers, the title vests in the grantee without an acknowledgement as completely as if the formalities of the statute had been complied with." Id. at 823. Nothing in our case law reflects an intent under the recording statutes to establish a property interest for purposes of determining whether a property owner has standing to bring an inverse-condemnation claim.

         Possession is also said to convey notice of some ownership interest. See, e.g., Langford v. Welton, 48 S.W.2d 860, 863 (Mo. 1932) (as to occupancy of real property, court states, "The visible indicia of possession is notice, and notice is equivalent of knowledge of all that would be learned by reasonable inquiry."); Shaffer v. Detie, 90 S.W. 131, 136 (Mo. 1905) (setting forth what "has always been the law in Missouri, " court states, "One may not be allowed to blindfold himself to the visible indices of ownership, such as abound in this case, and say that he had no notice"); and Hayward v. Arnold, 779 S.W.2d 342, 345 (Mo. App. W.D. 1989) (citing Langford, court states that "the purchaser of property takes subject to the rights of anyone in actual possession"). There is no evidence that anyone but the Hulls lived on the property and operated the golf course after 2005.[3] The District introduced no evidence that it dealt with anyone other than the Hulls beginning in 2007 when Mr. Hull alerted the District about the golf-course flooding. In addition, the District introduced into evidence a March 2005 lease between the Hulls and Pleasant Hill Golf, Inc., the corporate golf-course entity they own; it provided that Pleasant Hill Golf, Inc. was to pay rent to the living trust per the "purchase contract." It is reasonable to conclude on the basis of this document that the Hulls purchased the property from the living trust in 2005, and that rent from the golf-course operation would be used to some extent to finance the transaction. Thus, even if the District is correct and the taking occurred in 2007 when the property first flooded, all evidence other than the date the deed was recorded showed that the Hulls owned the golf-course property that year.

         If, however, as the jury determined, the taking occurred in October 2013, the Hulls were indisputably the owners then and had standing to bring the inverse-condemnation claim. This Court has recognized that the accrual of a cause of action for inverse condemnation involves a factual determination as to when the damage was capable of ascertainment. Shade v. Mo. Highway & Transp. Comm'n, 69 S.W.3d 503 (Mo. App. W.D. 2001). In this regard, we stated,

A cause of action for inverse condemnation accrues once the fact of damage is capable of ascertainment. . . . This determination will turn on the facts of each case. In a situation involving successive floods, the damage may not be ascertainable on the date of the first flood. It may well be that it would only become 'apparent by the passage of time that the intermittent flooding was of a permanent nature.' Damages are ...

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