Chapter 32 QUIET TITLE

• Jurisdiction: North Carolina

32 QUIET TITLE

A. Definition

In North Carolina, actions to quiet or remove a cloud¹ on title are governed by statute.² It provides: "An action may be brought by any person against another who claims an estate or interest in real property adverse to him for the purpose of determining such adverse claims . . . ."³

Prior to the statute, suits in equity to remove a cloud or quiet title to realty required a plaintiff to show: (1) no adequate remedy at law, (2) rightful possession of the land in question, and (3) the defendant's adverse claim injuriously affected the plaintiff's title.⁴ The General Assembly enacted an earlier version of the present statute in response to decisions it considered "an inconvenient or unjust application of the equitable doctrines involved."

The statute is much broader in "scope and purpose" than the former equitable remedy.⁵ The statute was "designed to avoid some of the limitations imposed upon the remedies formerly embraced by a bill of peace or a bill quia timet, and to establish an easy method of quieting titles of land against adverse claims."⁶ Specifically, while under early North Carolina case law a plaintiff could not maintain an action to remove a cloud on title unless it appeared affirmatively that he was rightfully in possession of the land, the statute extended the relief to those not in possession.⁷ The proceeding in a suit to quiet title to real property under the statute "is designed and intended to provide a means for determining all adverse claims, equitable or otherwise." It is not limited to a particular instrument, bit of evidence or encumbrance, but is aimed at silencing all adverse claims, documentary or otherwise. "Any action that could have been brought under the old equitable proceeding to remove a cloud upon title may now be brought under" the statute.⁸ The North Carolina Supreme Court in Satterwhite v. Gallagher gave an even more extensive description, saying:

[T]he law, as its terms clearly import, was designed and intended to afford a remedy wherever one owns or has an estate or interest in real property, whether he is in or out of possession, and another wrongfully sets up a claim to an estate or interest therein which purports to affect adversely the estate or interest of the true owner and which is reasonably calculated to burden and embarrass such owner in the full and proper enjoyment of his proprietary rights, including the right to dispose of the same at its fair market value. And it should and does extend to such adverse and wrongful claims, whether in writing or parol, whenever a claim by parol, if established, could create an interest or estate in the property, as in case of a parol trust or a lease not required to be in writing. And it should be allowed, too, when existent records or written instruments reasonably present such a claim . . . .⁹

The statute is "highly remedial"¹⁰ and liberally construed¹¹ "in order that the use and marketability of realty will not be hampered by unresolved conflicting claims."¹² The statute provides a remedy "more comprehensive than the old suit in equity to remove a cloud from title."¹³ It is "designed to provide a means for determining all adverse claims to land, including those formerly encompassed within the equitable proceedings to remove clouds on title."¹⁴

In bringing an action under the statute, the plaintiff is not demanding possession, but is merely stating the defendant has no right, title or interest adverse to the plaintiff's interest.¹⁵ That the plaintiff does not seek possession distinguishes the action from one in ejectment, which is a possessory action.¹⁶ However, courts have observed that there is some potential for overlap of the two actions. The North Carolina Supreme Court in Baldwin v. Hinton¹⁷ said that the action before it was "nominally a cause of action to remove a cloud from plaintiffs' title," but was essentially an action in ejectment because the defendants were in actual possession and the plaintiffs sought to recover possession.¹⁸ Thus, the action was, in essence, one in ejectment. In Poore v. Swan Quarter Farms, Inc.,¹⁹ the court acknowledged that actions to remove a cloud on title are "in essence ejectment actions" if the defendants are in actual possession and the plaintiffs seek to recover possession. However, since the plaintiffs in Poore made no specific allegation that the defendants were in actual possession at the time the action was filed and did not seek specifically to recover possession in their demand for relief, the court could not find that the plaintiffs' action was, in essence, one for ejectment. On the other hand, the North Carolina Supreme Court has noted that the statute "is broad enough to cover an action to quiet the title to real property though the person sued may be wrongfully in possession, and plaintiff might have maintained ejectment."²⁰

Another action that may become intertwined with quieting title is a statutory proceeding to establish boundaries.²¹ For example, in Chappell v. Donnelly,²² the plaintiffs commenced the action under the "boundaries" statute. The only issue to be determined in that type of action, said the court, is the location of a dividing line between two parcels of land. If, however, title to the land is put in issue, the action becomes, in effect, one to quiet title.²³

An action under the statute has been brought as a counterclaim to a plaintiff's action under the statute.²⁴ A declaratory judgment is an appropriate vehicle to "perform the duty of quieting title to real property."²⁵

Once a plaintiff establishes a prima facie case for removing a cloud on title, the burden is on the defendant to establish that his or her title defeats the plaintiff's claim.²⁶

A court should not enter a default judgment quieting title until the claims to the property of all defendants have been adjudicated.²⁷

B. Elements

To establish an action under the statute, the plaintiff must show he or she:

(1) Owns the land in controversy, or has some estate or interest in it; and
(2) That the defendant asserts some claim in the land that is adverse to the plaintiff's title, estate or interest.²⁸

C. Elements Defined

1. Plaintiff Owns the Land in Controversy, or Has Some Estate or Interest in It

The plaintiff must show an interest in the land in controversy.²⁹ Possession by the plaintiff is not a prerequisite to an action under the statute.³⁰ A plaintiff in an action brought under the statute need not allege and prove that, at the commencement of the action and at trial, he had an estate in or title to the land, as the statute only requires the plaintiff have an interest in the land to which the claim of the defendant is adverse. "The language of the statute is broad and liberal, showing the purpose of the General Assembly to permit any person to bring an action against another who claims an interest or estate in real property adverse to him."³¹ If the plaintiff does show ownership of the land in controversy in fee simple, the first element is, of course, satisfied.³² And prima facie evidence of title is sufficient for the case to be submitted to the jury.³³

Equitable, rather than legal, title is an adequate interest.³⁴ An interest as tenant in common has been considered sufficient to meet the element,³⁵ as has ownership of an estate in a remainder or reversion.³⁶ A deed of trust is a sufficient interest.³⁷

In Hill v. Taylor,³⁸ the trial court ruled the plaintiffs could not rely on the Marketable Title Act³⁹ to prove their prima facie interests in a landing because defendant was, and had been, in possession of the real property when the suit was filed. The appellate court said the lower court erroneously applied the possession exception to the Act. The purpose of the Act, said the appellate court, was to facilitate alienability and marketability of real property by allowing establishment of marketable title on a showing of a 30-year chain of title. The showing of marketable title is prima facie evidence that the person owns title to the real property described in the record chain of title.⁴⁰ Once the claimant establishes marketable title, the Act operates to extinguish interests that depend on any act that occurred prior to the 30-year period. However, the marketable record title does not affect or extinguish the rights of anyone in present, actual and open possession of the real property, as long as that person is in possession.⁴¹ Since the plaintiffs established prima facie ownership of an easement in the landing, pursuant to the Act, the burden shifted to the defendant to establish that his title defeated the plaintiffs' claims. The possession exception, said the court, did not operate to preclude the plaintiffs from relying on the Act to establish prima facie ownership; the defendant's possession only protected whatever interest the defendant had at the commencement of the action, the date the marketability of the plaintiffs' title was determined. It was for the jury to determine whether the plaintiffs owned interests in the landing, and if so, whether the defendant owned an interest that defeated the plaintiffs' interests; therefore, the trial court erred by granting defendant's motion for a directed verdict against the plaintiffs, who established their respective chains of title of more than 30 years.⁴²

In Plotkin v. Merchants Bank & Trust Co.,⁴³ the plaintiff claimed that he was seized in fee and in possession of a lot of land in controversy when the action was commenced, and that the defendant claimed a deed of trust regarding the same property. The plaintiff conveyed the lot pendente lite and, therefore, argued the defendant, at the date of the trial, had no title to or estate in the land and thus no interest in it, to which the defendant's claim under the deed of trust was adverse. As a result, the defendant contended, the plaintiff could no longer maintain or prosecute an action to have the deed of trust declared a cloud on his title or to have the...