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Advocate Article: Prescriptive Rights: Vested Before Judgment, or Contingent?

Published in the Idaho State Bar Advocate Magazine September 19, 2013

by: Arthur B. Macomber, Member, Real Property Section, Idaho State Bar.

Synopsis:

This article discusses Idaho law defining prescriptive or adverse possession claims as vested rights that a title owner of record has to “recover,” instead of rights contingent on quiet title adjudication.[1] With the 2006 change in the statutory period from five to twenty years, the issue of vested versus contingent interests has been brought to the forefront.  Law, logic, and private markets recommend the characterization of pre-suit adverse claims as merely contingent interests.  This discussion helps illuminate some interesting and sometime subtle principles at play.

Prescriptive Easement Interests and Evidence Required:

“An easement is the right to use the land of another for a specific purpose that is not inconsistent with the general use of the property by the owner.”[2] The Idaho Supreme Court has clearly stated that “[t]o establish an easement by prescription, the claimant must prove by clear and convincing evidence use of the subject property, which is characterized as: (1) open and notorious; (2) continuous and uninterrupted; (3) adverse and under a claim of right; (4) with the actual or imputed knowledge of the owner of the servient tenement (5) for the statutory period.”[3] Further, “[r]ecognizing that ‘[p]rescription acts a penalty against a landowner[,]’ . . . prescriptive rights ‘should be closely scrutinized and limited by the courts.’”[4]

Plain Language of Adverse Possession Statute.

For over 120 years, the fifth element—the statutory period to establish a prescriptive easement—was five years.[5] Language of today’s statute is identical to the 1887 language, except for the 2006 change of the statutory period from five to twenty years:

Action to recover realty. No action for the recovery of real property, or for the recovery of the possession thereof, can be maintained, unless it appears that the plaintiff, his ancestor, predecessor or grantor, was seized or possessed of the property in question within twenty (20) years before the commencement of the action; and this section includes possessory rights to lands and mining claims.[6]

“The language of a statute should be given its plain, usual and ordinary meaning.”[7]

The first two clauses of Idaho Code section 5-203 include both recovery of physical possession and recovery of non-possessory interests, such as easements. This accords with Idaho Code section 55-101, which defines real property interests as “[l]ands, possessory rights to land, ditch and water rights, and mining claims, both lode and placer[, t]hat which is affixed [or] appurtenant to land.”[8] In Idaho, easements are real property appurtenant to land unless they are personal easements in gross.[9]

“The creation of a private easement by prescription is not favored under Idaho law.”[10] Not favoring prescriptive rights, the legislature quadrupled the statutory period for prescriptive claims.[11] That change was due to “take effect” on July 1, 2006.[12]

A few questions arose. What does it mean to be “seized or possessed of the property . . . within twenty (20) years before the commencement of the action?”[13] What is the connection between the statutory period and a lawsuit’s filing date? What does “take effect” mean regarding allegedly accrued “vested” rights?[14] Did the 2006 enactment trigger a legislative taking whereby unadjudicated vested rights based on a five-year statutory claim were legally erased? Or, can a prescriptive easement claimant bring a five-year based claim decades down the road and enforce his “title?” If so, would this not erase the statutory link between the statutory period and the filing date of the action?

The Filing Date Determines Which Statutory Period Applies.

The Smith case recognized that the Legislature tied the statutory period to the filing date: “[a]ccepting [a certain date] as the correct date [of the filing of the action], it follows that this action was commenced thirty days before the expiration of the [twenty] year period of adverse possession, which otherwise would have matured and perfected defendants’ title.”[15] [16]

Neither Idaho Code section 5-203, nor its predecessor statutes, nor the Territorial Law of Idaho included punctuation separating the statutory period and the words “before the commencement of the action.”[17] Since at least 1881, this statutory structure provided the plain language means for proper interpretation of Idaho Code section 5-203.[18] In Smith, the adverse possession claim was dismissed, because suit was filed prior to the running of the statutory period.[19] By tying the filing date to the statutory period, the statutes alter the common law prescriptive easement action, thus the elements of a prescriptive easement must be proven within Idaho Code section 5-203, not as an action under common law.[20]

Interpreting the statute to recognize the filing date as determinative of which statutory period applies gives the benefit of certainty to property titles. The rule would be that for quiet title filings prior to July 1, 2006 an adverse possessor merely held a “contingent interest” and could bring an action to vest his right, instead of gaining vested title without court decree. Conversely, for a July 2, 2006 or later filing he would have to show a twenty year accrual of possession or use to have such a contingent interest adjudicated as a vested right.

In Idaho, Pre-Lawsuit Rights are Vested.

Since 2006, the Idaho Supreme Court has continued to state that if an adverse possessor meets the five elements, title “vests” in the adverse possessor “by operation of law.”[21] However, the Court in both Capstar III and Machado failed to explain why that conclusion of law was asserted, and thus it is arguable that the Court is not committed to that view. Further, the Court has not explained why such a claim automatically vests instead of being contingent on the outcome of a quiet title action.

Black’s Law Dictionary defines “vested right” as a “right that so completely and definitely belongs to a person that it cannot be impaired or taken away without the person’s consent.”[22] More to the point, a “vested interest” is “an interest the right to the enjoyment of which, either present or future, is not subject to the happening of a condition precedent.”[23]

In Idaho, the definition of a “vested right” was addressed in relation to water rights in United States v. Pioneer Irrigation District, wherein the Court stated that a “vested right” to the use of water may come into being by a judicial decree, permit, or license.[24] Additionally, fee simple title vests in a sheriff’s deed grantee if the foreclosed-upon mortgagor does not redeem within the statutory period.[25] In that case, the establishment of the vested right was contingent upon the prior grantee not redeeming, therefore only a contingent interest was held prior to redemption.[26]

Prior to 2006, a prescriptive easement claimant could present evidence of any continuous five-year time period back to the 1800s. Without explanation, the Idaho Supreme Court implied this will be true even 100 years from today, regardless of the 2006 legislative quadrupling of the statutory period.[27] The Backman case, decided in 2009, was filed in Bonner County as Case Number CV-2006-0000365 on February 24, 2006, prior to the effective date of the change, thus the Court’s ruling that the five-year period applied does not block a future Idaho court from finding adverse claims are contingent upon adjudication.[28]

Problems With the Vested Rights Characterization.

The characterization of a five-year-based claim as a vested right implies the judicial findings of a quiet title action are a mere declaratory judgment.[29] However, if a filing date is determinative of the applicable statutory period, would not a post-July 1, 2006 filed case confirming a vested right and a conveyance of title based on passage of a pre-2006 five-year statutory period be an invalid ipse dixit ruling? Such a holding of a conveyance of title using the old statutory period would ignore the Idaho statute defining contingent interests, and further, would be unworkable in modern real estate and title insurance markets.[30]

If a claimant’s right accrues and vests without him prevailing in court, a person could pull an ace from his vest and trump the property right of a title owner regardless of the date of “commencement of the action.” Taken a step further, a claimant would “own” the property in question without ever filing an action to transfer title. That interpretation eviscerates the statute of frauds regarding conveyances of non-possessory easements, allowing transfers to occur with simply the passage of time (plus the other elements).[31] This cannot have been the Legislature’s intent in 2006.

A Prescriptive Claim is a Contingent Interest.

In Idaho, “[a] future interest is contingent whilst the person in whom, or the event upon which, it is limited to take effect remains uncertain.”[32] “A future interest is vested when there is a person in being who would have a right, defeasible or indefeasible, to the immediate possession of the property upon the ceasing of the immediate or precedent interest.”[33] Specifically, “an estate vests in interest when there is a present, accrued, fixed and indefeasible right of enjoyment at a future time.”[34]

Idaho Code section 55-106 does not differentiate between wills, trusts, or real property interests. The solution proposed in this discussion would recognize that prior to commencing an action and prevailing, claimants do not have a vested right, but only “an inchoate expectancy, a contingent interest . . . in the event” of prevailing on their claim.[35] An unadjudicated prescriptive claim is not a present, accrued, fixed and indefeasible right of enjoyment at a future time, prior to “commencement of the action” and claimant’s prevailing in that action, but instead an interest contingent on that future event’s outcome.[36]

The vested rights fiction unsettles real property land titles, because there is nothing compelling an adverse claimant to bring suit to quiet title. “[I]f the plaintiffs have any interest in [a] property, either contingent or expectant, they may maintain an action to determine any adverse claim or interest thereto.”[37] Some case law recognizes that adverse claimants must “establish [the elements] . . . by clear and convincing evidence,” and thus any property interest remains contingent on adjudication.[38]

Pre-Adjudication Title Transfer by Operation of Law is Impractical.

Scenario #1: Title owner dies, and land ownership goes to the heir “by operation of law.”[39] This is proven by deed, will, or other estate-related document. If an adverse claimant appeared, the statute would allow the transfer to the heir, subject to that adverse claim.[40] However, to quiet title the adverse claimant would need to “commence[ ] an action” and receive a favorable judgment under Idaho Code section 5-203.

Conversely, if the adverse claimant died prior to filing suit, who would challenge the title transfer to the heir, except perhaps claimant’s estate? No title insurer or buyer would accept the risky title encumbered by a dead adverse claimant’s “vested” title without “commencement of a[quiet title] action.”[41] The fiction of automatic vesting of title to adverse claimants makes no economic sense, and unduly increases land investment risk and market instability.

Scenario #2: Adverse claimant requests title insurance for their “operation of law” pre-suit vested title ownership.[42] Refusing, the title company requires “commencement of the [quiet title] action.” A title company will not insure an inchoate expectancy, because its insurance could be triggered to defend a future quiet title action. Private markets logically consider adverse claims to be contingent on a civil judgment.

Scenario #3: Adverse claimant contracts for real estate agent to sell “his” land. The recorder’s office has no record of claimant’s deed or favorable judgment. The real estate agent will not risk trying to sell this property.[43] It is logical for the law to acknowledge the market risks found in real property conveyances.[44]

As in other areas of law, “[t]he more legally cogent time to sever a contingent interest and its accompanying [ ] relationship [to a true owner’s title] is the moment that the contingency fails to occur” upon judgment.[45]

Finally, if the claimant does not sustain his burden of proof, would we say the court destroyed a vested right by a judicial taking?[46] The judicial takings question is avoided if the pre-adjudicatory right is characterized as contingent.

Conclusion.

Maintaining the pre-judgment adverse claimant’s vested rights fiction disrupts real property conveyance and title insurance markets. Statutory contingent interests should not be construed as vested rights by the courts. A statute in effect when a case is commenced should not be ignored to favor a prescriptive claimant.[47] Idaho can and should dispense with the fiction so that statutes are given harmonious, practical, and logical effect.

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[1] I.C. § 5-203.

[2] Abbott v. Nampa School Dist. No. 131, 119 Idaho 544, 548, 808 P.2d 1289, 1293 (1991).

[3] Baxter v. Craney, 135 Idaho 166, 173, 16 P.3d 263, 270 (2000).

[4] Benninger v. Derifield, 145 Idaho 373, 375, 179 P.3d 336, 338 (2008); citing Gibbens v. Weisshaupt, 98 Idaho 633, 638, 570 P.2d 870, 875 (1977).

[5] I.C. § 5-203; see Hist. C.C.P. 1881 § 143; R.S. § 4036 (1887).

[6] I.C. § 5-203.

[7] I.C. § 73-113(1) (2013); Johnson v. Sanchez, 140 Idaho 667, 668, 99 P.3d 620 (Idaho App. 2004); George W. Watkins Family v. Messenger, 118 Idaho 537, 539-40, 797 P.2d 1385, 1387-88 (1990); Zener v. Velde, 135 Idaho 352, 355, 17 P.3d 296, 299 (Ct.App.2000).

[8] See 73-114(2)(e).

[9] I.C. §§ 55-101(3), 55-603, 73-114(2); 73 C.J.S. Property § 7, p. 159; Hughes v. State, 80 Idaho 286, 293, 328 P.2d 397, 404 (1958).

[10] Backman v. Lawrence, 147 Idaho 390, 397, 210 P.3d 75, 82 (2009); citing Elder v. Northwest Timber Co., 101 Idaho 356, 358, 613 P.2d 367, 369 (1980).

[11] I.C. § 5-203; S.L. 2006, Ch. 158, § 1, eff. Jul. 1, 2006.

[12] Idaho Const. Art. III § 22; I.C. § 67-510; Fox v. Board of County Com’rs, Boundary County, 121 Idaho 686, 690, 827 P.2d 699, 703 (Idaho App. 1991).

[13] I.C. § 5-203.

[14] Idaho Const. Art. III § 22; I.C. § 67-510.

[15] The phrase after the last comma must be in error, because prior to adjudication the adverse claimant merely enjoys a contingent interest, not a vested right, unless there was a judicial taking. I.C. § 55-105; Johnson v. Johnson, 113 Idaho 602, 746 P.2d 1061 (1987).

[16] Smith, 76 Idaho at 268-269, 281 P.2d at 486-487; but see Johnson v. Johnson, 113 Idaho 602, 746 P.2d 1061 (1987).

[17] I.C. § 5-203; see C.C.P. 1881, § 143; R.S. § 4036 (1887).

[18] Gen. Laws of Idaho, 11th Sess., Terr. Legisl., Boyakin (Terr. Printer), p. 27 § 143; I.C. § 5-203; Smith, 76 Idaho at 268-269, 281 P.2d at 486-487.

[19] Smith, 76 Idaho at 269.

[20] I.C. § 73-116.

[21] I.C. § 9-503; Capstar Radio Operating Co. v. Lawrence, 283 P.3d 728, 742, 153 Idaho 411, 425, fn. 2 (2012) (“Capstar III”) (“In 2006, Idaho Code section 5-203 was amended to extend the statutory time period from five years to twenty years. However, the twenty-year time period does not apply to an easement by prescription acquired prior to the amendment”); accord Machado v. Ryan, 280 P.3d 715, 725, 153 Idaho 212, 222 (2012); Smith v. Long, 76 Idaho 265, 268-269, 281 P.2d 483, 486-487 (1995); see Persyn v. Favreau, 119 Idaho 154 (1990), citing Kimball v. Lohmas, 31 Cal. 154 (1866);  and Cramer v. Walker, 23 Idaho 495, 499, 130 P. 1002, 1006 (1913) (“if appellant had been, as the evidence shows, in the continuous adverse possession of the property from April 5, 1884, and had paid the taxes assessed against the property continuously during that period of time, his claim by adverse possession had matured and ripened into title on the 5th of April, 1889,” prior to adjudication).

[22] Black’s Law Dictionary, 8th Ed., p. 1349 (2004).

[23] Black’s Law Dictionary, 8th Ed., p. 829 (2004).

[24] United States v. Pioneer Irr. Dist., 144 Idaho 106, 108, 157 P.3d 600, 602 (2007); Hardy v. Higginson, 123 Idaho 485, 490, 849 P.2d 946, 951 (Idaho 1993).

[25] Eastern Idaho Production Credit Ass’n v. Placerton, Inc., 100 Idaho 863, 867, 606 P.2d 967, 971 (1980).

[26] Id.; I.C. § 55-106.

[27] Capstar Radio Operating Co., 283 P.3d at 742, fn. 2, 153 Idaho at 425, fn. 2.

[28] Backman v. Lawrence, 147 Idaho 390, 210 P.3d 75 (2009).

[29] I.C. § 10-1201.

[30] I.C. § 55-106.

[31] I.C. § 9-503.

[32] I.C. § 55-106.

[33] I.C. § 55-105.

[34] Zimmer v. Zimmer, 47 Idaho 364, 367, 276 P. 302, 305 (1929); citing Thompson on Construction of Wills, 598.

[35] I.C. § 55-106; Johnson v. Johnson, 113 Idaho 602, 603, 746 P.2d 1061, 1062 (Idaho App. 1987) (prior to decedent’s death former spouse only had a contingent interest); Gem Valley Ranches, Inc. v. Small, 92 Idaho 232, 235, 440 P.2d 352, 355 (1968) (prior to being paid appellants only had a contingent interest); Bliss v. Bliss, 20 Idaho 467, 500-501, 119 P. 451, 474-475 (1911); citing Hirsh v. Auer, 146 N.Y. 13, 19, 40 N.E. 397, 403 (1895) ([contingent] interest became vested at the death of the insured); Wilson v. Linder, 18 Idaho 438, 448, 110 P. 274, 284 (1910) (plaintiffs have a contingent remainder in the estate which may be defeated).

[36] I.C. § 5-203.

[37] Wilson v. Linder, 110 P. 274, 280, 18 Idaho 438, 444 (1910) (emphasis added) (Court applies contingent interest analysis to acquisition of title to real property).

[38] I.C. § 55-106; Baxter v. Craney, 135 Idaho 166, 173, 16 P.3d 263, 270 (2000).

[39] Nebeker v. Piper Aircraft Corp., 113 Idaho 609, 619, 747 P.2d 18, 28 (Idaho 1987).

[40] I.C. § 55-503.

[41] I.C. § 9-503.

[42] I.C. § 9-503.

[43] I.C. § 55-501.

[44] I.C. § 9-503.

[45] See Beaudoin v. Davidson Trust Co., 263 P.3d 755, 759, 151 Idaho 701, 705 (2011) (Trustee’s fiduciary duty ended when contingency failed to occur to vest interest of beneficiaries); In re Rothchild’s Estate, 283 P. 598, 607-08, 48 Idaho 485, 494-95 (1929) (Contingent remainderman interest may vest to known beneficiary upon decedent’s death, but possessory interest is contingent upon ending of life estate); and In re Estate of Zimmer, 276 P. 302, 305, 47 Idaho 364, 367 (1929) (“[T]he uncertainty of the right . . . [is] the difference between the vested and contingent interest.”).

[46] Stop the Beach Renourishment, Inc. v. Florida Dept. of Environmental Protection, 560 U.S. ___, 130 S.Ct. 2592, 177 L.Ed.2d 184 (2010) (Discussion of whether judicial takings can constitutionally exist and what criteria would show such had occurred).

[47] I.C. §§ 5-203 and 55-106; Smith v. Long, 76 Idaho 265, 268-269, 281 P.2d 483, 486-487 (1995).