Proposed Title Legislation: A Suggested Solution to the

Marquette Law ReviewVolume 50Issue 1 August 1966 Article 2

Proposed Title Legislation: A Suggested Solutionto the Problem of "Marketable Title"Ray J. Aiken

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Repository CitationRay J. Aiken, Proposed Title Legislation: A Suggested Solution to the Problem of "Marketable Title", 50 Marq. L. Rev. 15 (1966).Available at: http://scholarship.law.marquette.edu/mulr/vol50/iss1/2

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PROPOSED TITLE LEGISLATION:A SUGGESTED SOLUTION TO THE

PROBLEM OF "MARKETABLE TITLE"

RAY J. AiKEN*

I. INTRODUCTION: STATEMENT OF THE PROBLEM

In contrast to the situation a half-century ago, when a given parcel

of land passed through a title transaction an average of once everytwenty-five to thirty years, the average in today's era of expanded com-merce and mobile populations is less than once every seven years. Fur-ther, the great tracts of wild and undeveloped lands which once pre-dominated in Wisconsin have yielded in substantial degree to ever-broadening programs of development. Consequently, the significance ofthe land record as a prime index of title has declined in favor of landuse.

In the first instance, long-recognized deficiencies in title practice,formerly tolerable, have been intensified by these changes in land useand the increased activity in the real estate market, and the need forimprovement has become more apparent. In the second instance, thesechanges have suggested a change in substantive approach to the problem.

The ultimate source of dissatisfaction with present title law andpractice is its intensified tendency to exaggerate errors of form andrecord, often to the prejudice of interests which are unblemished infact. This is the result of an attempt to prevent wholesale usurpation oflegitimate titles in an earlier day, when, possessory protections beingabsent, the title examiner was compelled to place heavy, even exclusiveemphasis upon the formal record. Thus a defect in the formal recordcame to constitute the equivalent of a defective title in fact, it beingnot the fact that a grantor had good title, but the appearance of thatfact of record that rendered a title merchantable.' The effect was arestriction of free marketability, which is inconsistent with the generalcommercialization of real estate.

The function of title examination is to provide assurance that one'stitle is legally invulnerable to attack, i.e., good in law and in fact. Anassurance that a title is merchantable or marketable (the terms aresynonymous),2 is an assurance that the title appears from the record tobe good, and such assurance performs this function only on the assump-tion that the record speaks "the truth, the whole truth, and nothing but

* Professor of Law, Marquette University Law School, Milwaukee, Wisconsin.Gerald R. Starr, third year law student, assisted in the preparation of thisarticle through research and otherwise.

'Stack v. Hickey, 151 Wis. 347, 138 N.W. 1011 (1912) ; Douglass v. Ransom,205 Wis. 439, 444, 237 N.W. 260, 262 (1931).

2 Douglass v. Ransom, 205 Wis. 439, 446, 237 N.W. 260, 263 (1931).

MARQUETTE LAW REVIEW

the truth." However, this assumption may be unfounded in law or infact in either of two generic ways.

First, the record may deceive in what it affirmatively declares. Someexamples would be cases of forgery or other want of authority to signdeeds, nondelivery, mistaken or fraudulent misdescription of parcelsconveyed, and misdeclaration of marital status.

Secondly, the record may mislead in what it omits to say, as incases of unrecorded deeds, satisfactions, or other conveyances; incom-plete evidences of corporate existence or power, defective instrumentsof authority of agents, inadequate evidences of jurisdictional founda-tion for judgments, ambiguous proofs of identity of persons, andomitted declarations of marital status. Each such omission produces anapparent hiatus of record title, total or partial, and some such hiatusbecomes the basis of all objections to title.

Faced with such a hiatus, the title examiner may, objectively, draweither of two inferences. He may infer from the silence of the record,or from the ambiguity of its statement, that the missing evidence, ifsupplied, would be favorable to title. On the other hand, he may inferthat the missing information would be unfavorable to title, i.e., he mayinfer the existence of a prior outstanding claim adverse to or inconsis-tent with the estate or interest which his client intends to purchase.

Under present law and practice, the alternative possibilities aregenerally resolved adversely to marketability of title. A grantor whodoes not state whether he is married or single is, for purposes of mar-ketability, assumed to have been married until proven single. A corpo-rate representative, an agent, or a fiduciary whose instruments ofauthorization are limited or not fully shown is assumed to have actedwithout authority until affirmatively shown to have been fully, properly,and expressly authorized. A judgment is assumed to have been enteredwithout jurisdiction unless the specific facts necessary to establish juris-diction are made to appear. It has become the settled conviction, insum, that an omission or ambiguity of record fact excites in the ordinaryprudent grantee of lands so powerful a provocation to inquiry thathis mala fides is conclusively implied from his failure to heed the same.

The impact of such a conviction is manifested in the overtechni-cality which must, and indeed does, flourish. In fairness, it should bepointed out that there are at least two bases upon which a degree ofsuch "fly-specking" can be practically and logically justified. First,since the examiner is compelled to accept a "clean" record withoutquestioning its complete authenticity, he is conservatively inclined tostretch that assumption no further than he must. Every "cloud" be-comes a source of deepest suspicion, regardless of its individual merits.Second, liberality on his part may very well collide with illiberality onthe part of a subsequent examiner, it being a "matter of common knowl-

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PROPOSED TITLE LEGISLATION

edge that some examiners of title are more particular and technicalthan others about passing titles."'3 It becomes embarassing, to say theleast, when a title examiner must justify his leniency to a client in whosehands the title suddenly become unmarketable, in fact if not in law.More seriously, the impact of this conviction upon the facile creation,transfer, or mortgaging of real property interests elevates the unreal,the imagined, the merely possible interest which is adverse to thehighly probable title, to the status of a cumbersome and contractdefeating obstacle to the ready achievement of such purposes. Feudalattitudes to the contrary notwithstanding, there is a dynamic and intelli-gent commerce in real estate today, one which modern legislation canafford neither to ignore nor to discourage.

The most technical and the most liberal of title examiners couldagree entirely, however, that a title which is demonstrably invulnerableto attack, i.e., good in fact, meets any standard of title examination;and they could further agree on the converse, that a title which isdemonstrably vulnerable to attack meets no standard. So long, however,as the land record remains broadly open to conflicting possibilities ofinference, legal or factual, the issue of marketability must always re-main a highly subjective matter, resolved on substantially an ad hocbasis. The improvement of title law and practice should thereforeachieve, at least in some measure, a greater predictability of interpreta-tion of title evidences.

II. ALTERNAT IVE APPOACHEs To THE PROBLEMTwo generic avenues of approach are open, though there is not

absolute necessity of electing one to the complete exclusion of the other.First, "outstanding claims adverse to or inconsistent with" apparent

title could be legislatively or judicially declared to be, in specified situa-tions, unenforceable, void, barred or extinguished. Secondly, market-ability could be redefined, legislatively, judicially or through organizedaction of the Bar, so as to prohibit, in specified instances, certain infer-ences adverse to title.

The first approach operates fundamentally against the owner of theoutstanding claim, if such claim exists in fact, and therefore may expro-priate property. Whether or not this can be done without violatingtraditional notions of due process depends, to a large extent, upon thespecific circumstances under which it is attempted. For the purposesof this discussion, however, nothing shall be assumed in this regard, i.e.,it will not be assumed either that such extinguishment violates or doesnot violate due process.

The second approach operates fundamentally against the titleexaminer and his client, the purchaser, in that it effectively compels

3 Id. at 448, 237 N.W. at 263.

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him to accept and pay full value for a title which may, in fact, bevulnerable to legal attack. While centuries of experience have been hadwith the various title-clearing devices of the first category, experiencewith those of the second category is comparatively modern, and islimited in scope.

A. JUDICIAL OR LEGISLATIVE VOIDING OF OUTSTANDING CLAIMS

ADVERSE TO OR INCONSISTENT WITH APPARENT TITLE

1. Actions and special proceedings in rem to quiet title, or actions inpersonam having the same effect. Under modern redefinition, acquisitionof jurisdiction over local actions requires only, procedures reasonablycalculated to give notice.4 However, outstanding claims are judiciallyextinguished, with legislative sanction, regardless of whether suchnotice is actually received.5 Also,

[The owner of an equitable interest] . . . may not sit by andpermit judgment to be taken in either a legal or equitable actionwith the expectation that he will not be concluded thereby as inother cases. He must at the proper time assert his rights underthe circumstances of the particular case in the manner prescribedby law.6

2. Statutes of limitations, and actions to establish titles acquired there-under. A usurpation of title by disseisen, which extinguishes legitimateinterests, occurs if an entry is made which is actual, nonpermissive,notorious, exclusive and uninterrupted for twenty years.7 If the entryis under a "color of title" instrument, valid or invalid, recorded orunrecorded, usurpation of title occurs after only ten years of suchdisseisen.8 The action to establish titles so acquired, and to avoid titlesso extinguished, is brought under section 281.02 of the WisconsinStatutes. However, adverse possession is strictly construed, and itmust be clearly proved that the adverse user is truly hostile to andinconsistent with the rights of the true owner.9 The statutes run, there-fore, only against those having the right of possession at the time ofentry, and consequently do not run against remaindermen, reversioners,or future interest holders generally. The statutes also run only againstthose persons having legal capacity to resist.10

4Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950) ; Wuchterv. Pizzutti, 276 U.S. 13 (1928).

5 Wis. STAT. §§281.01, 235.60 (1963). Wis. STAT. §269.47 (1963) provides fordefesne even after final judgment when service is by publication, but alsoprovides that ". . . title to property, sold under such judgment to a purchaserin good faith, shall not thereby be affected."

6 Oconto Co. v. Bacon, 181 Wis. 538, 547-48, 195 N.W. 412, 415 (1923).7 WIs. STAT. §§330.08-.10 (1963); Shephard v. Gilbert, 212 Wis. 1, 249 N.W.

54 (1933).8 WIS. STAT. §§330.06, .07, .10 (1963) ; Marky Investment Inc. v. Arnezeder, 15

Wis. 2d 74, 112 N.W. 2d 211 (1961); Peters v. Kell, 12 Wis. 2d 32, 106 N.W.2d 407 (1960).

9 Zeisler Corp. v. Page, 24 Wis. 2d 190, 198, 128 N.W. 2d 414, 418 (1964).10 WIS. STAT. §330.135 (1963).

[Vol. 50


It should be noted that the tolling of the statute for minority ordisability does not necessarily extend the ten year ultimate limitation,even where entry is made against a minor or incompetent. For example,in case of entry under a forged or fraudulent color of title instrumentagainst a minor sixteen years old, limitation runs ten years after entry,not fifteen. This is so because section 330.135(1) merely extends thelimited time sufficiently to allow five years for bringing an action afterthe disability is removed. However, the limitation would be fifteenyears if the minor were only eleven years old at the time of entry,since he would again be allowed five years after removal of his dis-ability. Note also that tacking of disabilities is not provided for."1 Theresult is that interests may be extinguished even though the owner isnot at any time in a position to resist. Nevertheless, because of possiblefactual or evidentiary problems, titles founded on adverse possessionare, at best, of doubtful marketability.

3. Recording or Nonrecording acts and equities.(a) Conventional form-Statutes of this type conventionally ex-

tinguish unrecorded (and otherwise unnoticed) interests upon the rec-ord of a subsequent conveyance to a bona fide purchaser. BecauseWisconsin's statute, section 235.49, establishes no "period of grace"and contains no "saving provisions" for minors or incompetents, itcan operate within very short periods of time. However, it is limitedto cases in which one interest-holder double-conveys his interest, i.e.,it requires that there be a common grantor.'2 Thus, the conven-tional recording act cannot reach the case of haitus (whole or partial,true or technical), which is the source of substantially all title objection.

(b) Judicial estoppels by nonrecording-It is well established inWisconsin that a bona fide purchaser, induced to rely to his detrimentupon record title, may extinguish a prior unrecorded interest eventhough he fails to qualify under section 235.49 by reason of his failureto record ahead of the prior interest.' 3 The doctrine rests upon estoppelby laches.' 4 The principle has not been applied, however, to cases otherthan those of double-conveyance by a common grantor, so the recordhiatus is unsolved by this device.

(c) Stale record acts (Non-current recording)-Most modem"marketable title acts," including Wisconsin's section 330.15, are en-actments of this type. Wisconsin's statute purports to extinguish, infavor of purchasers "for value," all interests except easements, cove-nants, and governmental and public utility interests, of which no noticeappears of record within thirty years of the time such purchaser's in-

" Swearingen v. Robertson, 39 Wis. 462 (1876).32 Fallass v. Pierce, 30 Wis. 443 (1872).'3 Marling v. Nommensen, 127 Wis. 363, 106 N.W. 844 (1906).34 Id. at 369, 106 N.W. at 845

19661


terest arises.15 Easements and covenants are extinguished under thesame conditions after sixty years.16

As originally enacted in 1941,'1 the statute operated only in favorof bona fide purchasers and their successors. Since a true owner inactual possession would give notice of his interest by the fact of hispossession, the statute could not operate originally to divest the titlesof non-recording owners in possession. However, in order to permitsuch owners to institute quiet title proceedings despite their nonrecord-ing, subsection 330.15(4) provided that the section shall not apply toany action commenced by an owner in possession.

The wording was the unfortunate consequence of an equally un-fortunate opening sentence, the product of an again unfortunate mis-classification of the statute as a statute of limitations. Section 330.15 isnot a Statute of limitations, since its period does not begin to run uponthe arising of the cause of action. Instead, its period runs backwardfrom the time when the purchaser for value arises,"8 and it is there-fore a form of nonrecording act. Upon the erroneous assumption thatit was a statute of limitations, or upon the assumption that it would beconstitutionally or otherwise more acceptable if it were thought to beone, section 330.15(1) began with the typical phrase of such statutes:"... no action... shall be commenced .... " Therefore, it required somesort of exemption for quiet title actions by owners in possession.

The amendment for 194319 was also somewhat unfortunate. Actingon the assumption that a record more than thirty years old neverthelesscontinued to afford constructive notice, it was suggested that the statutein its original form could never operate, because no bona fide purchasercould arise regardless of the antiquity of the voided interest. Ratherthan limit the notice-giving power of ancient records, the amendmentreduced the original bona fide purchaser requirement to the present"purchaser for value.12 0 Probably unwittingly, the amendment therebystripped away much of the protection formerly accorded to nonrecording"owner in possession," since if he ever lost possession, the amendmentprevented him from regaining it even against a land pirate. This spectrewas made the more ominous by the failure of the section to definepossession, so that, conceivably and conventionally, an interest notcurrently recorded was completely "up for grabs" whenever its ownerwas physically absent from the premises.15 WIS. STAT. §330.15(1) (1963).16 WIS. STAT. §330.15(5) (1963).1' Wis. Laws 1941, ch. 293.

8 ".. . no action . . . shall be commenced . . . which is founded upon any un-recorded instrument executed more than 30 years prior to the date of com-mencement of the action . . . ." WIs. STAT. §330.15(1) (1963).

19 Wis. Laws 1943, ch. 109, s. 2.20 WIs. STAT. §330.15(6) (1963): "The word 'purchaser' as used in this section

shall be construed to embrace every person to whom any estate or interestin real estate shall be conveyed for a valuable consideration and also everyassignee of a mortgage or lease or other conditional estate."

[Vol. 50


Despite these well recognized difficulties with the form of thestatute, its principle has stood the test of experience. Title standardsadopted by the Bar have stipulated that it shall be given force.21 Moreto the point, however, the first case has yet to arise in which thestatute has operated to actually extinguish a legitimate interest on thebasis of nonrecording; and even in quarrels over marketability of titles,no case has presented a test of the statute's basic validity. The irresist-able conclusion, in a purely empirical sense, is that record defects of allkinds very rarely reflect actual vulnerability of titles.

4. "Curative" Statutes. In the main, existing statutes of this type simplyaccommodate past transactions to modifications of formal requisites.Thus, wartime deeds, or deeds lacking, for example, seal, witnessing,acknowledgement, or specific corporate charter authorization, whichwere previously invalid or unrecordable, were by curative statutes de-clared valid or recordable, either generally or after a stated period fromexecution or record. In a broad sense, all title legislation is essentially"curative." In the form in which attorneys have become accustomed tocurative statutes, they are confined to treatment of mere formalities ofexecution. 22 At least one of Wisconsin's curative statutes purports sum-marily to "cure" defects of a substantive sort.23

B. REDEFINITION OF "MARKETABILITY" THROUGH ACTION

OF THE LEGISLATURE, BENCH OR BAR

1. Marketable Title Acts. Nomenclature presents difficulty in this area.Although section 330.15 has never been denominated a "marketabletitle act," neither it nor the Michigan marketable title act 24 declares titles"marketable," in the sense of declaring that a purchaser entitled tomarketable title must accept them. Instead, both operate as nonrecordingacts in that they affirmatively extinguish claims of which no noticeappears of record within a stated number of years. The "Model Acts"of Professors Simes and Taylor 25 began with a slightly revised versionof the Michigan act, and proceeded in a rather heterogenous fashion to

21 "Section 330.15 of the Statutes shall be applied and availed of in passingupon titles in those situations to which that section is by its terms appli-cable." REAL ESTATE TITLE STANDARD No. 4 (Wisconsin State Bar).

22See Wis. STAT. §§235.15 (use of forms, sufficient in law but other than asprescribed by statute) ; 235.18 (conveyance not under seal) ; 235.19(12) (de-fective acknowledgement; 23520 defective execution) ; 23521 (defective seal) ;235.255 (instrument executed by person in war service) ; 235.48 (conveyancesmade under prior statutes) ; 235.68 (defective conveyances of farm or home-stead property to satisfy indebtedness) ; and 235.69 (1963) (variance in namesof parties). See also Wis. STAT. §§992.01-07 (1963).28WIs. STAT. §23520 (1963), with some ambiguity, purports to validate corpor-ate conveyances executed "by the proper corporate officers . . . [but] withoutcorporate authority" after ten years of record, and does so without regard togood faith or the absence of it on the part of the claimant benefitted. Thisprovision,, therefore, amounts to a summary validation of a species of forgery.

24 MICH. STAT. ANN. §§26.1271-.1279 (1953).25 Simes & Taylor, Improvement of Conveyancing by Legislation, (1960).

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expand upon the principle so as to cover title problems within Michi-gan's forty year period.

Wisconsin's section 235.69, relating to name variances which haveappeared of record for twenty years, is a "marketable title act" in afar more restricted sense, in that it simply declares a title containingsuch a defect to be "not unmerchantable." Both on its face and inpractical operation, the statute is innocuous. It is pratically inconceiv-able that, even initially, the variants with which it deals suggestforgeries. It is more inconceivable that the title could be upset by theappearance of the legitimate titleholder after twenty years. Further-more, it is extremely doubtful that the courts would regard a namevariance, after such a time, as a basis for "reasonable doubt," so asto make title unmarketable, regardless of the statute.

The principle of the statute is more debatable. It compels the titleexaminer to regard as marketable a title which of record, is not con-clusively invulnerable to legal attack. In so doing, it rather plainlyimpairs the obligation of contract between seller and purchaser byrequiring the latter to accept less than he bargained for. Suppose theunlikely event occurred, i.e., the legitimate titleholder appears, exposesthe forgery and seeks to eject the purchaser. Section 235.69 itself armsthe purchaser with no defense; and in most cases he finds his defense,if at all, only in enactments of the first category explored above.

2. Prima Facie Evidence Enactments. Such enactments, prime Wis-consin examples of which are sections 235.46 (relating to affidavitsstating facts of record) and 992.08 (relating to certificates of countytax sales) are a clumsy and indirect, but apparently effective way ofaccomplishing much the same thing as does section 235.69. That thelegislative mind was not centered upon the problem of judicial admis-sibility of such affidavits is evident from the fact that the provisionswere far removed from Chapters 327 and 328 of the WisconsinStatutes, which deal with that subject. Unquestionably, the force ofthese sections was to compel a title examiner to accept such "evidence"as proof of marketability, and this appears to be the settled construc-tion.

26

Statutes of this type go, at least arguably, a small step beyondsection 235.69, in that they afford the title examiner and purchaserdocumentary proof upon which to build at least a prima facie case infavor of his title. But of what importance is this evidence? Eitherthe questioned fact will never be in issue, or it will come into issuewhen the title is directly challenged. If the latter, it can hardly beassumed that the challenger will come into court with no evidence-simply putting the purchaser to his proofs.

26 Haumersen v. Sladky, 220 Wis. 91, 264 N.W. 653 (1936).

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The fact that such statutes, especially section 235.46, have "workedwell" testifies eloquently to the highly significant fact that record defectsrarely reflect any real likelihood that the title is vulnerable to attack,and that title objection based upon such defects is, therefore, withoutobjective justification. The best argument that can be made for "primafacie evidence" statutes is that they afford a seller a phantom weaponwith which to put to rest phantom assaults upon his title. By the sametoken, however, real defects of title are immune from such statutes.They therefore do not reach the essential problem: the conflicting possi-bilities of inference, legal and factual, in determining the marketabilityissue.3. Bar Association Title Standards. To the extent that title standardsmay be enforceable against both title examiners and purchasers, theyoperate in very much the same fashion as do marketable title and primafacie evidence statutes, discussed supra, and judicial redefinitions ofmarketability, discussed post. They are distinguishable only in that theymay receive a lesser degree of judicial recognition, and in that theymay yield more readily to practical problems of original enactment andchange. They can properly reach no further, however, than existinglegislation and judicial decision will carry them; they must amountsimply to a recitation of particular applications of settled law. Withintheir limitations however, improved title standards can, and do, improvetitle practice. But if there are problems inherent in existing title lawitself, no improvement of title standards can reach such problems.4. Judicial redefinition of marketability. The Wisconsin SupremeCourt, in Haumersen v. Sladky,2 7 clearly implied that the title examinerin that case had carried improbable technicality beyond even the widediscretionary limits declared in Douglass v. Ransom.3 This case illus-trates the possibility of seeking to improve title practice by resort tothe courts. However, the case also illustrates the limitations of thatapproach, and the fatal weakness thereof. Like the title examiner him-self, the court may be torn between inclinations to liberality and con-servatism. Like the title examiner himself, the court may be unable todiscount entirely the possibility that a title which it forces upon anobjecting purchaser may prove defective in fact. In any event, it isplain that individual litigants will be loath to carry the burden ofachieving improved title practice through the courts; and that, inview of the variety of defects to be attended to, judicial redefinition ofa comprehensive sort would be painfully slow.5. Broader Use of Title Insurance. This possibility probably representsthe most promising approach in this category. Marketability of title andinsurability of title are not comparable terms, principally because the

27 Ibid.28205 Wis. 439, 237 N.W. 260 (1931).

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insurer's appraisal of a given risk will normally reflect the situation'srealistic potentialities, not merely its literal or technical implications.

This alternative has, in common with the preceeding four devices,the characteristic that it does nothing to improve the title itself, thoughit ordinarily operates to produce easy marketability. It is, by presentexperience, hardly less expensive-in terms of its total impost on thereal estate industry-than any other device for title assurance; andthis may be true precisely because it does nothing to improve the title.In individual cases, reliance upon title insurance may operate to imposeextreme hardships, by way of underinsurance, technical policy defenses,or assertions of rights of subrogation against uninsured vendors ormortgagors. The ultimate shortcoming of the title insurance device,however, is the practical difficulty in achieving and maintaining pro-tection of the many thousands of title transactions on an individual-policy basis. Present title practice cannot be expected to yield over-night to any near-universal substitution of title insurance.

III. PROPOSED WISCONSIN STATUTE SECTION 235.491The Title Legislation and Standards Committee of the State Bar

of Wisconsin, at its June, 1963 section meeting, approved the followingproposed statute for presentation to the state legislature :29

Section 235.497. Notice from the record.30

(1) A purchaser for a valuable consideration, without noticeas defined in sub. (2) hereof, and his successors in interest, shalltake and hold the estate or interest purported to be conveyed to

29 For the history of the proposed legislation, and a discussion of an earlierdraft of the proposal, see Lovejoy, Proposed Title Legislation, 1963 WiscoN-SIN BAR BULLETIN 45, (April) ; Aiken, Commentary on Proposed Title Legisla-tion, 1963 WISCONSIN BAR BULLETIN 49, (April).

30 Enactment of the proposed section 235.491 would necessitate amendment ofsection 75.30 to read:Section 75.30.

(1) Five-Year Limitation. In addition to other applicable limitations, noaction shall be brought by the original owner of the recovery of lands pur-porting to be conveyed by a tax deed, whether or not void on its face, afterthe expiration of five years from the date of the recording thereof, in caseswhere the grantee in the tax deed shall have taken actual possession of suchland within two years after the date of such recording and shall have actuallyand continuously maintained such possession to the end of such period offive years.

(2) Affidavit of Possession. Proof of such possession of the grantee andthe record of the tax deed shall be conclusive evidence of the legality andeffectiveness of the deed and of the title conveyed. As a means of provingpossession the grantee may, at any time after five years from the date of thetax deed, record an affidavit that such deed was issued and recorded andthat the grantee is in possession of the real estate described therein as definedin section 75.31 and has been in such possession for a continuous period com-mencing within two years after such deed recording and has actually andcontinuously maintained such possession to the end of such period of fiveyears. A certified copy of the record of any affidavit of possession shall con-stitute prima facie evidence of the facts recited therein.

(3) Exclusions and Application. The term "grantee" shall include anysubsequent owner of the title of the lands. The term "former owner" shall

[Vol. 50


such purchaser free of any claim adverse to or inconsistent withsuch estate or interest, if such adverse claim is dependent for itsvalidity or priority upon:

(a) Non-delivery. Non-deliveryor conditional or revocabledelivery, of any recorded conveyance, unless the condition orrevocability is expressly referred to in such conveyance or otherrecorded instrument.

(b) Conveyance outside chain of title and not identified bydefinite reference. Any conveyance, transaction or event not ap-pearing of record in the chain of title to the real estate affected,unless such conveyance, transaction or event be identified bydefinite reference in an instrument of record in such chain. Noreference shall be definite which fails to specify, by direct refer-ence to a particular place in the public land record, or, by positivestatement, the nature and scope of the prior outstanding interestcreated or affected by such conveyance, transaction or event, theidentity of the original or subsequent owner or holder of suchinterest, the real estate affected, and the approximate date of suchconveyance, transaction or event.

(c) Unrecorded extensions of interests expiring by lapse oftime. Continuance, extension or renewal of rights of grantees,purchasers, optionees, or lessees under any land contract, option,lease or other conveyance of an interest limited to expire, abso-lutely or upon a contingency, within a fixed or determinable time,where two years have elapsed after such time, unless there isrecorded a notice or other instrument referring to such continu-ance, extension or renewal and stating or providing a later timefor the enforcement, exercise, performance or termination ofsuch interest and then only if less than two years have elapsedafter such later time. This paragraph shall not apply to life estates,mortgages or trust deeds, nor shall it inferentially extend anyinterest otherwise expiring by lapse of time.

(d) Non-identity of persons in chain of title. Non-identityof persons named in, signing or acknowledging one or more re-lated conveyances or instruments affecting real estate, providedthe persons appear in such conveyances under identical names orunder variants thereof, including inclusion, exclusion or use of:commonly recognized abbreviations, contractions, initials, or for-eign, colloquial or other equivalents; first or middle names orinitials; simple transpositions which produce substantially similarpronunciation; articles or prepositions in names or titles; descrip-tion of entities as corporations, companies, or any abbreviationor contraction of either; name-suffixes such as senior or junior;where such identity or variance has appeared of record for fiveyears.

(e) Marital Interests. Dower or homestead of the spouseof any transferor of an interest in real estate, where the re-

not refer to or include any real estate title or interest therein while owned,occupied and used by any person defined in section 196.01 or 195.02 or anytrustee or receiver of any such person or any mortgagee or trust deed trusteeor receiver thereof. This section shall apply to tax deeds heretofore or here-after recorded, but the commencement of any action shall not be precluded bythis section until two years after its effective date.

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corded conveyance purporting to transfer the same states thatthe person executing it is single, unmarried or widowed; or failsto indicate the marital status of such transferor, and where suchconveyance has, in either case, appeared of record for five years.

This paragraph shall not apply to the interest of a marriedwoman who is described of record as holder in joint tenancywith such transferor.

(f) Lack of authority of officers, agents, or fiduciaries. Anydefect or insufficiency in authorization of any purported officer,partner, agent or fiduciary to act in the name or on behalf ofany corporation, partnership, principal, trust, estate, minor, in-competent or other holder of an interest in real estate purportedto be conveyed in a representative capacity, after the conveyancehas appeared of record for five years.

(g) Defects in judicial proceedings. Any defect, or irregu-larity, jurisdictional or otherwise, in an action or proceeding outof which any judgment or order affecting real estate issued afterthe judgment or order has appeared of record for five years.

(h) Non-existence, incapacity or incompetency. Non-ex-istence, ultra vires act or legal incapacity or incompetency of anypurported person or legal entity, whether natural or artificial,foreign or domestic, provided the recorded conveyance or instru-ment affecting the real estate shall purport to have been dulyexecuted by such purported person or legal entity, and shallhave appeared of record for five years.

(i) Facts not asserted of record. Any fact not appearing ofrecord, but the opposite or contradiction of which appears affirma-tively and expressly in a conveyance, affidavit or other instrumentof record in the chain of title of the real estate affected for fiveyears. Such facts may, without limitation by non-inclusion, relateto age, sex, birth, death, capacity, relationship, family history,descent, heirship, names, identity or persons, marriage, maritalstatus, homestead, possession or adverse possession, residence,service in the armed forces, conflicts and ambiguities in descrip-tions, identification of any recorded plats or subdivisions, corpo-rate authorization to convey, and the happening of any conditionor event which terminates an estate or interest.

(j) Defects in tax deed. Non-existence or illegality of anyproceedings from and including the assessment of the real estatefor taxation up to and including the execution of the tax deedafter the tax deed has been of record for five years.

(k) Interests not of record within 30 years. Any interest ofwhich no affirmative and express notice appears of record withinthirty years.

(2) A purchaser has notice of a prior outstanding claim orinterest, within the meaning of this section wherever, at the timesuch purchaser's interest arises in law or equity:

(a) such purchaser has affirmative notice apart from therecord of the existence of such prior outstanding claim, includingnotice, actual or constructive, arising from use or occupancy ofthe real estate by any person at the time such purchaser's interesttherein arises, whether or not such use or occupancy is exclusive;

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provided, however, that no constructive notice shall be deemedto arise from use or occupancy unless due and diligent inquiryof persons using or occupying such real estate would, under thecircumstances, reasonably have disclosed such prior outstandinginterest; nor unless such use or occupancy is actual, visible, openand notorious; or

(b) there appears of record in the chain of title of the realestate affected, within thirty years and prior to the time at whichthe interest of such purchaser arises in law or equity, an instru-ment affording affirmative and express notice of such prior out-standing interest conforming to the requirements of definitenessof subsection (1) (b) ; or

(c) the applicable provisions of paragraphs (c) to (k) in-clusive of subsection (1), requiring that an instrument haveremained for a time of record, have not been fully satisfied.

(3) This section shall not be applied to bar or infringe anyprior outstanding interest in real estate:

(a) while owned, occupied or used by any public servicecorporation as defined in section 196.01 or any railroad corpo-ration as defined in section 195.02, or any trustee or receiver ofany such corporation, or any mortgagee or trust deed trustee orreceiver thereof; nor any such interest while held by the UnitedStates, the state or any political subdivision or municipal corpo-ration thereof; or

(b) which, at the time such subsequent purchaser's interestarises, is unplatted, vacant and unoccupied, unused, unimprovedand uncultivated; except that this subsection (b) shall not applyto prior interests dependent for validity or priority upon the cir-cumstances described in paragraphs (a), (b), (j) and (k) ofsubsection (1).

(4) The term "chain of title" as used in this section shallinclude instruments, actions and proceedings discoverable by rea-sonable search of the public records and indices affecting realestate in the office of the register of deeds and in probate and ofclerks of courts of the counties in which the real estate is lo-cated; a tract index shall be deemed an index where the same ispublicly maintained.

(5) Nothing in this section shall be construed to raise orsupport any inference adverse or hostile to marketability of titles.

IV. WHAT Is THE GENERAL PRINCIPLE

OF THE PROPOSED LEGISLATION?It should be noted that the proposed legislation makes no exclusive

choice between the various alternative approaches to the problem. Itanticipates the continued utilization of all of them, and would not beadverse to their expansion and liberalization. However, the fact thatno exclusive choice is made should not dispense with choice altogether.Title practice will hardly be improved if it continues to become morecomplex and multiprincipled. This was the chief difficulty with other

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proposals studied and rejected by the Title Legislation and StandardsCommittee.8 1

The current proposals adopt the "non-current recording" principleof section 330.15 of the Wisconsin Statutes, and apply that principleto a small set of selected transactions less than thirty years old. Asin the original form of that enactment,32 the proposals operate only infavor of. bona fide purchasers, and give full sway to constructive noticearising from actual use or occupancy. They correct any supposition,arising from form or placement in the statute books, that they are"statutes of limitations" in any proper sense of that term. Therefore,no specific provision to exempt actions by "owners in possession" isrequired. They meet the problem of constructive or actual notice fromold records directly, by depriving such records of their notice-givingpower, as against "otherwise" bona fide purchasers. Indeed, weresubsection (1)(a)-(j) inclusive deleted from the proposal, leavingonly (1)(k), "Interests not of record within 30 years," the proposalwould represent simply a restatement of section 330.15 as originallyenacted, involving but two substantive modifications.

First, the nonrecording period for easements and covenants wouldbe reduced from sixty to thirty years. Second, notice from possessionwould have been defined, by (2) (a) and (3) (b) of the proposal, soas to permit notice from non-exclusive possession, limit notice fromoccasional or seasonal occupancy, and exclude wild and undevelopedlands from operation of the section.33 In other respects, the definitionof "notice from possession" stated in (2) (a) appears to correspond toexisting case law.3 4

Apart from the fact that the Bar has generally lent its approval tothe principle of section 330.15 as the best device for improvement oftitle practice, the proposals favor that principle over the suggestedalternatives for reasons generally implicit in the foregoing discussionof the alternatives themselves.

31In 1960 the University of Michigan Law School published the first of severalbooks on title reform, Simes & Taylor, Improvement of Conveyancing byLegislation, (1960). This was followed by Simes & Taylor, Model TitleStandards,. (1960), and Simes & Taylor, A Handbook for More EfficientConveyancing, (1961).

After thorough study, the Title Legislation and Standards Committeeelected to abandon the Simes-Taylor approach. It was felt that these pro-posals offered no single-principled scheme by which a greater predictabilityof interpretation of title evidences might be achieved, and that Wis. STAT.

-§330.15 (1963) formed a more familiar and better base upon which to build.32 Subsection (6> of Section 330.15, defining a "purchaser" simply as one who

takes for value, was not added until 1943. Wis. Laws 1943, ch. 109, s. 2.33 It would be entirely feasible, by slight amendment of the proposed (2) (a),

to allow the stale notice provision to operate upon such wild and undevelopedlands, without making such essentially "unguarded" lands subject to the re-maining cut-off provisions of the proposal.

34 Olmsted v. McCrory, 158 Wis. 323, 148 N.W. 871 (1914); Miller v. Green,264 Wis. 159, 58 N.W. 2d 704 (1953); Bump v. Dahl, 26 Wis. 2d 607, 133N.W. 2d 295 (1965).

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V. WHAT CONSIDERATIONS UNDERLIE THE REDucED GRAcE PERIODS?Though consistently faithful to the general principle of nonrecording

and stale notice, the proposals, in subsections (1) (a)-(j), define speci-fied situations in which, it is felt, the thirty year "grace period" isunwarranted, unrealistic, and largely ineffective to meet the centralproblem of excessive "phantom" title-defects. As a general proposition,this proposed "grace period" is five years. 5 As above noted, the "graceperiod" for easements and covenants is reduced from sixty to thirtyyears.

In proposing these reductions, a number of factors have been takeninto account, and a general balance of probabilities applied. Generally,the aim has been to facilitate the title transaction as thoroughly aspossible without incurring substantial risk that legitimate interests willbe unfairly extinguished thereby. The emphasized words indicate thekey considerations.

The substantiality of the risk is dependent, first, upon the likelihoodthat a given record defect will reflect the existence of a real outstandingclaim. Experience would indicate that in the overwhelming majority ofcases, there is no such likelihood, even in the case of "fresh" records.Variances are almost universally the product of mistake or inadvertence.

The substantiality of the risk is dependent, second, upon the likeli-hood that the legitimate interest-holder will use the protective measuresavailable to him, and the first key consideration thereby merges some-what with the second. However, under the proposed statute, merenegative, ambiguous or inferential record notice more than five yearsold is declared ineffective in the cases specified; all forms of actual oraffirmative notice, on or off the record, will protect the legitimateinterest; and the scope of notice from possession or occupancy is con-siderably expanded. Subsection (2) (a) imposes a rather strict respon-sibility upon the subsequent purchaser to explore the fact of physicaloccupancy thoroughly. By subsection (3) (b), unplatted, vacant andunoccupied, unused, unimproved and uncultivated lands are totallyexempted, on the hypothesis that normally-available possessory pro-tections are absent in those cases. Finally, the proposal operates onlyin favor of "a purchaser for a valuable consideration, without notice...and his successors in interest ... ."36 By this limitation, legitimate in-terests cannot be usurped in favor of defrauders, donees, heirs, devisees,or creditors; but only in favor of those who innocently infer that thecurrent, i.e., thirty-year, record supports the apparent title, and changeposition in reliance upon that inference.

Possessory protections will most commonly be available to theholders of present possessory interests, but not equally to future interest

3 5Proposed Section 235.491(1) (c), (d), (e), (f), (h), (j).36 Proposed Section 235.491 (1).


holders. These would include, generally, remaindermen after life estates,reversioners after leaseholds, beneficiaries under trusts (especially re-mote, contingent 'r residual beneficiaries), and married women entitledto dower or homestead protection. In each case, some complicity of thepresent interest-holder in the fraudulent usurpation of the future in-terest will ordinarily be present; for otherwise the assertion of thehostile claim would evoke affirmative action by the present interest-holder, which would automatically operate to protect the future interestas well.

The principal protection afforded such interests, in common with allother legitimate interests under the proposals, is a practical one whicharises out of the grace period. A person inclined to attempt a fraudagainst a legitimate interest is motivated by a hope of present gain.He does not, and generally cannot, predict circumstances five yearsinto the future. The perpetration of his fraud, under the proposedstatutes, must be anticipated by recording a fraudulent conveyance fiveyears in advance, else the proposals will not operate, and if the pro-posed statutes will not operate in the interim, the defrauder will ex-perience the greatest difficulty in realizing any profit out of his fraud.

A final element of protection to legitimate interests of all kinds isthe integrity of the legal profession itself, especially when that factis joined with the seemingly innocuous provisions of section 59.513. 7

A title fraud, to be successful under the proposed legislation, willpractically require the complicity of someone having a considerableexpertise in both title law and conveyancing. Whatever might be theinclination of the lay public to attempt a title fraud, there is every basisfor the assertion that the legal profession would only rarely include amember inclined to assist in such a scheme, to say nothing of naminghimself as draftsman of the fraudulent conveyance.

Traditionally and modernly, Wisconsin's policy and practice hasplaced principal reliance upon the integrity of notaries public as astopgap to forgeries and related frauds. Until comparatively recently,it was common practice for them to draft conveyances as well as takingacknowledgments of them. Though screening practices in the com-missioning of notaries have been lenient, there has been a remarkablepaucity of instances in which forged conveyances have passed eventhe casual and often inexpert scrutiny of a notary.

The proposed legislation assumes that, while there may be somerisk of a coincidence of all of these factors in derogation of legitimateinterests, the proposals reduce that risk to obvious insubstantiality.

37 WIS. STAT. §59.513 (1) (1963) : "No instrument by wNhich the title to real estateor any interest therein . . . is conveyed . . . shall be recorded by the registerof deeds unless the name of the person who . . . drafted such instrument isprinted, typewritten, stamped or written thereon in a legible manner. .. "

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However, the proposals would be totally ineffective if they couldnever operate to extinguish a legitimate interest. This is to say thepossible validation of forgeries and other fraudulent usurpations of titlemust be countenanced if a statute of this type is to operate at all. Thepresent section 330.15 involves the same possibility. The ultimate issueis simply whether extinguishment of legitimate interests, howeverrarely or improbably, is an unfair provision, under any of the pre-dictable circumstances in which it may be expected to operate.

The question of fairness or unfairness is necessarily a bilateralconsideration. If regarded purely and simply from the standpoint ofthe person whose right may be extinguished, any possibility of suchextinguishment is "unfair." In this sense, quiet title actions, statutesof limitations, judicial estoppels, conventional recording acts and thepresent section 330.15 are also "unfair." Bilaterally regarded, however,there must be taken into account the necessities of real estate commerce,and the circumstances of the subsequent purchaser who seeks legalprotection against extinguishment of his interest.

It certainly cannot be disputed that title law and practice have madeevery effort to guarantee the complete accuracy, freedom from doubtor ambiguity, and general reliability of the public land records. Neithercan it be disputed that these efforts have not been entirely successful,and probably never will be. The problem is, therefore, whether it isany more "fair" to foist the losses which may arise out of these occasionalinstances of unreliability of evidence upon the owner of the misrepre-sented title or upon the subsequent purchaser who depends upon it.Caveat emptor, if it were broadly acceptable as a principle of com-mercial law, would insist upon the former. The proposals being dis-cussed, within their very severe limitations, would insist upon the latter.

In final analysis, the reason for this proposed degree of departurefrom traditional policy is that caveat emptor, applied to commercialreal estate transactions, unreasonably burdens and discourages thosetransactions. A purchaser under legal forewarning to "be wary or besorry" can be required, in fairness, to extend his wariness no furtherthan probable inference from available data would suggest. Presenttitle law and practice insists that he go further, running every vagrantsuspicion to the ground, and even then declares that he is unprotectedby the evidences upon which he has relied.

Whatever may be the propriety of caveat emptor as applied to anindustry in which the good faith purchaser and the legitimate ownerare [generally] equally vulnerable to loss by fraud, it is submitted thatmodern real estate commerce is not such an industry. Present law andpractice compels thousands of buyers and, sellers to go to ridiculousextremes of wariness, assurance, and "title correction" in order to layto rest the ghosts of typographical errors and technical omissions.

19661


hoping thereby to avoid the remote possibility of extinguishing onelegitimate interest, whose owner may or may not have extended theslightest reasonable effort to protect himself.

This, it is submitted, is unfair to the modern real estate industry.Conversely, no objectionable unfairness inheres in the remote but con-ceivable possibility that the proposals may operate, as many otheraccepted forms of title legislation now operate, to cut off legitimateinterests.

VI. How WILL "SHORT GRACE PERIODS" OPERATE

IN SPECIFIC CASES, As COMPARED To PRESENT LAW?

Each of the subsections of subsection (1) of the proposed statutewill be discussed in order.

(a) Non-delivery. Under present law, an undelivered deed is anullity.38 Whether or not the same proposition applies to undeliveredcontracts related to land is a matter of some doubt, as is the questionwhether affirmative "acceptance" is indispensable to operation of aconveyance in favor of an adult and competent grantee.3 9

In Everts v. Agnes,40 after extensive soul-searching, the WisconsinSupreme Court held that a grantor, who entrusted a fully-executeddeed to a third-party, with instructions to deliver to the grantee onfulfillment of certain conditions, remained owner of the property evenas against a subsequent bona fide purchaser from the named grantee,when the grantee procured the deed without satisfying the conditions.This position has since been qualified only to the extent of holding,inconsistently, that if a deed is obtained from grantor himself bygrantee himself, the delivery being conditional, the condition itself isunenforceable.

4 1

Delivery is a formal manifestation of intent to transfer, which isits principal element.4 2 Why the formality of delivery should be super-imposed upon formalities of preparation, signature, sealing, attestation,and acknowledgment before our law will conclude that grantor reallyintended the transfer proclaimed by his deed is a mystery lost somewherein the feudal ceremony of livery of seisen, when lands were customarilyconveyed without benefit of any writing whatsoever. From the timewhen statutes of frauds did away with parol transfers, the lingeringsemblance of excuse for continued insistence on delivery was that aconsiderable time interval necessarily and frequently occurred between

38 Chaudoir v. Witt, 170 Wis. 556, 170 N.W. 932 (1919) ; Giblin v. Giblin, 173Wis. 632, 182 N.W. 357 (1921); Sederlund v. Sederlund, 176 Wis. 627, 187N.W. 750 (1922) ; Kolber v. Steinhafel, 190 Wis. 468, 209 N.W. 595 (1926);Ritchie v. Davis, 26 Wis. 2d 636, 133 N.W. 2d 312 (1965).

39 Welch v. Sackett, 12 Wis. 270 (1860) ; Jones v. Caird, 153 Wis. 384, 141 N.W.228 (1913); Estate of Duwe, 229 Wis. 115, 281 N.W. 669 (1938).

40 4 Wis. 356 (1855), 6 Wis. 445 (1857).41 Chaudoir v. Witt, 170 Wis. 556, 170 N.W. 932 (1919).42 Herzing v. Hess, 263 Wis. 617, 58 N.W. 2d 430 (1953).

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execution of a deed and its intended time of operation. Widespreadilliteracy and comparative unavailability of able conveyancers made itbroadly convenient to allow the parties to breathe life into their trans-action by the uncomplicated* device of manual tradition.

As a reading of the cases cited above would suggest, the principalimpact of delivery questions on modern conveyancing is in disputesbetween heirs over "deathbed" conveyances. Rarely will a bona fidepurchaser be involved. Where such a purchaser is involved, however,Everts v. Agnes would appear to control the case against him, in favorof the heir whose equity is limited to his birthright.

Modern commercial law has long deemphasized the delivery re-quirement, and now proposes, by several provisions of the UniformCommercial Code,43 to eliminate it altogether, at least as against bonafide purchasers. The rationale is essentially one of estoppel. If, to suitpersonal convenience, a grantor sees fit to perform all of the variousformalities requisite to draftsmanship and execution of a commercialinstrument, the risk of possible unintended circulation is, by presentcommercial law, borne by the originator of the instrument, not by himwho deals in reliance hpon its supposed validity.

By precisely the same token, subsection (1)(a) of the proposedstatute would reverse the rule of Everts v. Agnes in real estate trans-actions, wherever the "undelivered" conveyance appeared of record. Agrantor who purports, by signature, attestation, and acknowledgment,to effect a present transfer of an interest in real estate, ought not tobe heard, as against the subsequent claim of a bona fide purchaser, toassert the essentially secret defense of nondelivery. Because the elementof estoppel is more obviously present in nondelivery cases than in casesdealt with in the later subsections of the proposal, no "grace period"is provided in this instance.

(b) Conveyance outside chain of title and not identified by definitereference. This species of title defect is related to non-recording, andit is, therefore, again deemed inappropriate to establish a grace periodwith reference to it. The basic kind of defect at which the subsectionis aimed is the practice of referring, in one conveyance, to some in-cumbrance or limitation of title to which such conveyance is madesubject, or, probably more frequently, which is excepted from thewarranty of such conveyance. For example, there may be exceptedfrom a conveyance "a certain lease in favor of Charles Jones," or "a

43 For example, U.C.C. §3-306 establishes "nondelivery, or delivery for a specialpurpose" as a defense to the claim of one not a holder in due course. How-ever, U.C.C. §3-305, comment 3, makes it clear that it is intended that a holderin due course hold free from the defense of "nondelivery, conditional de-livery or delivery for a special purpose." Holding an undelivered deed tobe a "nullity," of course, would rule out any such subsequent vitalization ofthe instrument, even in the hands of one not involved in the transaction inwhich delivery failed.

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certain easement in favor of Lot Six." If such outstanding leasehold,mortgage, option, easement, contract or other interest is properly ofrecord within -thirty years in the chain of title to the affected lands,the indefinite reference thereto, though itself insufficient to give noticeof the interest, is immaterial. But the proposed subsection (1) (b)would operate to excuse inquiry as to the unrecorded interest, whichunder present practice often requires running the vagrant interest tothe ground through almost every possible avenue of investigation. Theproposal does not prevent notice of a prior unrecorded interest frombeing given by reference in a subsequently-recorded instrument; but itdoes insist that such reference be sufficiently definite to apprise thetitle examiner of the important details of the outstanding interest. Forexample, subsection (1)(b) requires that such reference specify thenature and scope of the interest, the identity of its owner or holder,the real estate affected by it and the date of the conveyance, transaction,or event by which it was created. Such information, if not directlystated, may be by "direct reference to a particular place in the publicland record"-necessarily either outside the chain of title of the landsaffected, or more than thirty years old-where the details are set out.

The subsection may conceivably have a second application to con-veyances, affidavits and the like, which may of themselves be sofatally indefinite as to fail to identify the essential details of the in-terest sought to be created or noticed. For example, a grant of an ease-ment may afford no means of identifying the servient estate, but mayappear in the chain of title purely by reason of the identification ofthe grantor. Such grantor may own many tracts, any of which mightconstitute the servient estate. To the extent to which there is visibleevidence of the exercise of such an easement on the ground, of course,subsection (2)(a) of the proposal would protect the interest. In caseswhere this was not true, however, subsection (1) (b) could operate,except as against governmental and utility interests, protected by sub-section (3) (a).

(c) Unrecorded extension of interests expiring by lapse of time.A common title defect is the presence of various limited-interest con-veyances, without affirmative evidence of their discharge, release, for-feiture or abandonment. For example, the record may show a landcontract from A to B, calling for final "closing" by December 1, 1963.In 1962, A conveys and warrants full title to C. Early in 1966, Cproposes to sell or mortgage to D. The transaction is obstructed by thepurported A-B contract.

The proposition that "time is not of the essence" of the ordinarycontract relating to real estate is well-recognized, and was emphasizedin Long Investment Co. v. O'Donnell,44 where a contract in the ordi-

44 3 Wis. 2d 291, 88 N.W. 2d 674 (1958).

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nary interim form was held, as between the parties, enforceable ap-proximately three years after its stated date of performance, neitherparty having done anything of consequence in the interim to settle orclose the transaction. Whether or not the subsequent purchaser fromthe original vendor would have taken subject to the "open equity" ofthe first purchaser had the former been aware simply of the existenceof the earlier contract was not, of course, touched upon; but thatproblem provokes the proposed (1) (c).

In the typical case, investigation will most often disclose that theprior executory interest, in fact, does not encumber the title. The priorpurchaser will either have forfeited his interest or will have settledthe same on some informal basis. Especially will this be true in thosecases in which the prior interest is already two years past its statedtime of expiration.

The propriety of assuming that interests of purchasers, lessees,optionees, or other interest holders have expired after their stated con-summation dates is buttressed by the fact that, but for possibilities ofequitable relief from purely technical time defaults, any fully effective"continuance, extension, or renewal" of such interests ordinarily de-mands execution and recording of a new document. Otherwise, thecase would logically come within the principle of conventional non-recording acts, 5 and the bona fide purchaser would be protected inde-pendently of the proposed statute.

The only function of the proposed subsection (1) (c), therefore, isto negative any suggestion that the presence on the record of the orig-inal, apparently expired conveyance itself provokes particular inquiryas to possible exercise, extension, or renewal. It may be doubted thatany "grace period" whatever is appropriate in such a case, since noneis provided by section 235.49, relating to the effect of an unrecordeddeed. Certainly it would be unfortunate if, by process of negativeinference, the proposed statute were construed to mean that, forexample, the recording of a six-month option, rendered the title un-marketable until two years after the option, by its terms, had expired.No such negative inference is intended. What is intended is to providethat after such two year period inquiry is unnecessary, regardless ofwhether or not it may have been necessary before. The grace periodis allowed as a compromise concession to "informal" extension ar-rangements, in the hope that by briefly "clogging" the titles of vendors,optionors and lessors, any inclination to reconvey in fraudulent defianceof such arrangements will be effectively discouraged.

(d) Non-identity of persons in chain of title. By process of in-consistent technical inference, today's title examiner assumes that whenproperty owned by Charles D. Jones appears to have been conveyed by

45 WIs. STAT. §235.49 (1963).

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Charles D. Jones, the owner and the transferor are identical; whereasif the same property appears to have been conveyed by Chas. D. Jones,or Charles Jones, or C. D. Jones, the transferor is an interloper and,usually, a forger.

46

These technical approaches to the problem are unsatisfactory ontwo accounts. First, the inference favorable to title, i.e., that the sub-sequent conveyance is not a forgery, regardless of the perfection orimperfection of its form, is not legally dependable. If the conveyanceis a forgery, the most circumspect of title examinations is of no avail.Second, the inference unfavorable to title, i.e., that imperfection ofform suggests a reasonable probability of not only forgery, but a clumsyattempt at that, is extremely unrealistic.

Present practice permits the inference unfavorable to title to beeffectively overcome, for purposes of marketability, in either of twoways; by passage of twenty years under section 235.69, or immediatelyby the recording of an affidavit of identity under section 235.46. Whyit should be supposed that one initially guilty of forgery would haveany compunction against correcting his technical mistakes by falseaffidavit is apparently neither questioned nor explained.

Thus, the central problem in modern title law and practice is, asabove suggested, the problem of forgery in one species or another.Because our system of land titles to date includes nothing akin to publicsignature cards or fingerprint indentification systems, our ultimatedefense against forgery lies in the system of notarial acknowledgment.When that defense has been overcome, the question is simply one ofthe forger discriminating between victims.

It would appear senseless to hold, as is now held, that an imper-sonator and forger who misspells or abbreviates a name provokesinquiry into his fraud, whereas one who is more meticulous does notdo so. The possibility that a forgery may lurk in the chain of title isat least as good in one case as the other. On this reasoning, the pro-posed statute does not single out the case of the "name variance" as aspecial instance of title defect arising from possibility of forgery, butmakes the same rule apply "whether the persons appear in such con-veyances under identical names or under variants thereof. .. ."

As suggested above, the problem of forgery of the title record canbe met either by foisting the risk upon the subsequent purchaser or bypermitting the forgery to operate, divesting the title of the true ownerin favor of a subsequent good faith purchaser. The general commentswhich introduced this paper, relating to the need for more realisticapproaches to judging the marketability of titles, suggest the rationale

46 An objection to title based on a name variance in instruments recorded. lessthan twenty years, and thus not "cured" by Wis. STAT. §235.69 (1963), isrecognized as valid. WiscoNsIN REAL ESTATE TrrLE STANDARD No. 5, (Wis-consin State Bar).

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for the position adopted in the proposed legislation. To this extent,and for these reasons, subsections (1)(d)-(j) constitute deliberate,though limited, reversals of the traditional rule of property law that aforgery is an absolute nullity, and no right, title or interest can ariseout of it.

It should, perhaps, be noted that subsection (1) (d) does not pur-port to "cure" a complete hiatus of title, but only a hiatus in factwhich does not appear affirmatively of record. Thus, if the owner ofrecord appeared as Charles D. Jones, a subsequent conveyance by Mrs.Charles D. Jones, or Charlotte Jones, or Charles D. Johnson, wouldnot evoke this subsection. Such a defect could be cured, under the pro-posed statute, either (1) by quieting title (and if such proceeding in-volved a defect, subsection (g) might apply); or, (2) by filing anaffidavit identifying the missing conveyance in the chain and assertingthat it had in fact been executed and delivered, which would be effectiveafter five years under subsection (i); or, (3) by invoking the stalenotice provisions of subsection (k). Absent such curative procedures,however, the appearance of "an affirmative and express notice of suchprior outstanding interest"-the interest of Charles D. Jones-undersubsection (2) (b) would indefinitely suspend possible operation ofthe proposed statute against that interest.

(e) Marital Interests. Under existing law, a conveyance by amarried man of his homestead, without joinder or.estoppel of his wife,is void.47 Such conveyance of non-homestead property is ineffective tobar dower. Title problems arise chiefly in the case of failure of therecord to disclose the marital status of a male grantor. The possibleinferences are that he is either married or single. If married, either heis attempting a fraud upon the interest of his wife, or she has includedher interest by a form of transfer not appearing of record. Even if theformer be true, the attempted fraud as to dower cannot be consum-mated prior to widowhood.

It should be noted that such fraud upon the rights of a marriedwoman by failing to disclose marital status, is, like the misspelledforgery, a clumsy attempt. A husband intelligently bent upon suchpurpose would improve his prospects of success considerably by de-claring himself to be single, divorced or widowed; and, if he hadbeen so inept in the first instance as to omit such declaration, he orthose holding under him would presumably have no reluctance tosupply the false evidence by affidavit under section 235.46 or other-wise. The preferred device for perpetrating such a fraud, all thingsconsidered, would probably be the substitution of a female imposterfor his lawful wife on the original deed or mortgage, thus placing thecase squarely within the forgery provisions of subsection (d).

47W's. STAT. §235.01(2) (1963).

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There are two considerations which differentiate this problem fromforgery problems in general, assuming our policy is to protect con-tingent marital interests no more strongly than it protects a fee simpleabsolute. The first additional consideration is that, in many cases, theassertion of a marital interest against a subsequent bona fide purchaserfor value may permit the married woman both to "have her cake andeat it." There is no necessary implication from the fact that a marriedman conveys his land without his wife's joinder, that she is excludedfrom at least unknowing participation in the fruits of his fraud. In-deed, some of that fruit may persist, in disguised form, in the estateof the husband at his death, and the wife may well be in position todouble her widow's entitlement by that fact. Assume a married manwho, by one or another of the suggested frauds, sells a piece of prop-erty for $9000, which sum he collects from the purchaser and subse-quently invests and reinvests, ultimately placing the resultant securitiesin joint tenancy with the "defrauded" wife. He then dies. The widowtakes the entire lot of securities by survivorship, and also asserts, per-haps against a bona fide purchaser, her entitlement to dower out of thewrongfully conveyed property. The claim for breach of warranty bythe grantee from the husband goes begging for lack of probate assets.

The second distinguishing factor is that, in the ordinary case, awife is factually in position to exercise far closer surveillance overthe nefarious activities of her husband than is the victim of a fraudperpetrated by a complete stranger. The married woman of today isnot the disentitled and disenfranchised demi-chattel in whose interestdower and homestead protections were created centuries ago. Grantingthat title law should lend no impetus to the disturbance of what littledomestic tranquillity may remain in the modern age, it is still possibleto assume that a married woman might perform discreet inquiries intoher husband's financial affairs at intervals not to exceed five years.Under present law, it may be safely asserted that if she postpones suchinquiry for ten years, she will be barred in any event. 48

(f) Lack of authority of officers, agents, or fiduciaries. Obviously,"any defect or insufficiency in authorization of any purported officer,partner, agent or fiduciary to act in the name or on behalf of any ...holder of an interest purported to be conveyed in a representativecapacity" means that the resultant conveyance, intentionally or unin-tentionally, is a forgery. Little need be added to the foregoing reason-ing on that generic subject, except that a forgery by the mechanism ofmisrepresented power to act for another can be treated no differentlythan forgery by the mechanism of impersonation. True, some types of"power" are necessarily in writing, and therefore susceptible of beingrecorded and scrutinized. This fact, however, tends more to emphasize

48 WIS. STAT. §330.04 (1963).

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than to diminish the need for including these "forgeries" within theoperation of the proposed statute, because the larger the possibility ofdocumentary "proof" of a title fact, the greater the opportunity fortechnical objection to the form or sufficiency of such documents, andthe greater the likelihood that the documentary record will includesome error or emission.

One consideration which would appear to have peculiar importancein this area is the fact that, unlike the case of the impersonator, theagent-forger does not usually operate entirely outside of the protectivemantle of his purported principal. By an ill-defined and little-understoodprinciple of agency law, a principal is not chargeable with the guiltyknowledge of an agent or employee when that knowledge is acquireddirectly out of a scheme to defraud the principal or employer.49 Asecond principle which bears on the problem is the anomalous andmuch-questioned "sealed instrument" or "equal dignity" rule, whichseverely restricts implications of authorization in "sealed instrument"cases.50 Carried to their logical extreme, these rules can, and at timesdo, impose on modern title practice extremes of "authentication" whichonce characterized the system of notarial acknowledgment. There certi-fications were required by the clerk of courts that a notary was anotary, by a judge that the clerk was a clerk, by the county clerk thatthe judge was a judge, and so on ad absurdum.5s

A second special consideration which may apply here is the wide-spread practice, at least of a large proportion of the principals whoseinterests may be affected under this subsection, of requiring fidelitybonds of their officers, partners, agents and fiduciaries. Since, as amatter of legitimate practical inference, unauthorized conveyances ofthe property of such principals will most commonly be attempted by

49 Farmer's Life Ass'n v. Houghton, 207 Wis. 357, 241 N.W. 357 (1932).50 A concise statement of the "equal dignity rule" is found at 2 C.J.S. Agency

§27(d) (1936): "As a general rule, in order that an instrument under sealmay be validly executed by an agent, the agent's authority must have beenconferred on him by an instrument of equal dignity, and if the authority isnot so given, then the instrument executed by the agent is not binding ....The rule has been changed in some of the states by statutes abolishing alldistinctions between sealed and unsealed instruments, in which case a sealedauthorization is unnecessary."

Wis. STAT. §235.01(1) (1963), provides that "conveyances of land or anyestate or interest therein may be made by deed signed and sealed by the per-son from whom the estate or interest is intended to pass, being of lawfulage, or by his lawful agent or attorney." (Emphasis added.) The significanceof the seal in Wisconsin is properly the subject of speculation, in light ofthe permissive rather than mandatory language of section 235.01(1), and thestatement in WIs. STAT. §235.19(13) (1963) that a properly acknowledgedconveyance is recordable although it is not sealed. This doubt as to the seal'ssignificance in conveyancing, by the "equal dignity" rule, creates similar un-certainty as to its importance on an instrument permitting an "agent there-unto authorized by writing" to execute a conveyance, given pursuant to Wis.STAT. §240.06 (1963).

1The process of acknowledgment in Wisconsin has been greatly simplified bythe adoption of the Uniform Acknowledgment Act, Wis. STAT. §235.19 (1963).

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persons who hold some degree of authority from the same principals,it would appear probable that many losses occasioned by defalcationsof this type will be compensable by claim on the bond. Whatever maybe the pros and cons of shifting such losses from principals to subse-quent bona fide purchasers, different considerations may come into playwhen the practical question is between a paid fidelity insurer and suchsubsequent purchaser.

(g) Defects in judicial proceedings. It would not appear, underpresent law, that a non-jurisdictional defect or irregularity in any actionor proceeding necessary to complete the chain of title constitutes anobjection to marketability, if the time for appeal has run.52 The titleproblem arises principally in two slightly different aspects. Most com-monly, the case record fails affirmatively to disclose that a jurisdictionalprocedure has been followed. Furthermore, if the examiner be mildlytechnical, he may well refuse to accept a bare recitation of that factin the prefatory recitals of the judgment or order itself.53 Less com-

monly, the examiner is in doubt whether the defect or irregularity inquestion is jurisdictional or not.

In any event, the title record, necessarily examined and re-examinedupon the event of each title transaction for at least thirty years, iscomplicated and extended by the full burden of papers and recitalswhich happen to appear on file.

As was the case in subsections of the proposed legislation alreadydiscussed, the omission of affirmative proof of jurisdiction in the recordcan produce either of two implications: jurisdiction was acquired or itwas not. To assert that it was not requires a supposition that theattorney, the clerk, and the presiding judge were either defrauders,incompetents, or seriously careless, not an impossible supposition, butan extremely tenuous one.

A strange legal anomaly appears here, which has some reflection inthe problem of forged instruments generally. By force of the familiarpresumption, the regularity of judicial proceedings is demonstrated,prima facie, by the very fact that a judgment or order is entered.54

522 PATrON, TimLEs §591 (1957).53 "In some localities, the attorneys give full faith and credit to the recitations

in judgment showing that the court had jurisdiction and that certain requiredprocedures were followed .... Attorneys in other areas insist on a fullerabstracting, particularly of those documents establishing the jurisdiction ofthe court .... ." Wis. PRAc. METH. §156 (1959). Pollard v. Wegener, 13 Wis.636 (1861) (Recitals relating to due service held insufficient to establish juris-diction, since if the record discloses that there was not such service in fact,the court was without jurisdiction in all matters, including jurisdiction to makethe recital) : ".. . [I]f the facts upon Which the supposed jurisdiction was as-sumed are recited in the record, and they appear from it to have been insuf-ficient, and not such as in law would confer such jurisdiction, then the partyis not bound by it, but may disregard all its averments." Id. at 643.

54 Wis. Stat. §§262.16(6), 263.33 (1963). "It is not to be assumed that a courtof general jurisdiction in any case proceeded to adjudge upon matters overwhich it had no authority; and its jurisdiction is to be presumed, whether

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Chapter 328 of the Wisconsin Statutes establishes numerous otherpresumptions which variously affect title examination, and section328.25, in particular, would appear to create a presumption that ourubiquitous "Chas." Jones is really Charles. Nevertheless, title law andpractice appear to hold that the absence of a proof of service from acourt record, or the variance in spelling of Jones' name, creates a validobjection to marketability of title.5- However, the filing of an affidavitunder section 235.46 creates "prima facie evidence" of the same factand thereby cures the defect.5 6 Obviously, these propositions are in-consistent.

(h) Non-existence, incapacity or incompetency. A conveyance to anonexistent grantee, 57 or to one not legally entitled to hold realty, s isvoid. A conveyance by a nonexistent grantor, or one not legally entitledto convey by his own act, is at least voidable.5 9 These rules havenecessitated demonstration and redemonstration, examination and re-examination, of supporting certifications with respect to conveyancesby or to corporations, partnerships, and even proprietorships, and havein some cases even brought into question matters of personal emanci-pation or competency.

Unless, however, circumstances prompt a far greater protection todefectively organized or enfranchised corporations or to minor or in-competent grantors than is given landowners generally, the possibilityof validation of deeds involving such defects must be countenanced tothe same extent that the possibility of validation of forgeries is coun-tenanced. Added impetus is given to subsection (h), however, by thefact that general corporate franchise laws now reduce the technicalitiesof incorporation to a minimum and broadly extinguish the ultra viresobjection.

60

(i) Facts not asserted of record. Existing section 235.46 createsa prima facie presumption, for title purposes, of the truth of factsrelating to titles which are made to appear of record by affidavit. The

there are recitals in its record to show it or not." Linschitz v. C. A. NeubergerCo., 230 Wis. 304, 310, 283 NW.. 811, 814 (1939).

55 Douglass v. Ransom, 205 Wis. 439, 237 N.W. 260 (1931).56 Haumersen v. Sladky, 220 Wis. 91, 264 N.W. 653 (1936).57 City Bank of Portage v. Plank, 141 Wis. 653, 124 N.W. 1000 (1910); Marky

Investment, Inc. v. Arnezeder, 15 Wis. 2d 74, 112 N.W. 2d 211 (1961).58 Hanna v. Kelsey Realty Co., 145 Wis. 276, 129 N.W. 1080 (1911).59 Lenhard v. Lenhard, 59 Wis. 60 (1883); Luedtke v. Luedtke, 181 Wis. 471,

195 N.W. 382 (1923).60 Wis. Stat. §180.04 (1963): "General powers. Each corporation, when no in-

consistent provision is made by law or by its articles of incorporation, shallhave power:

(4) To purchase, take, receive, lease, take by gift, devise or bequest, orotherwise acquire, and to own, hold, improve, use and otherwise deal in andwith real or personal property, or any interest therein, wherever situated.

(5) To sell, convey, mortgage, pledge, lease, exchange, transfer and other-wise dispose of all or any part of its property and assets."

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inadequacies of this section, as an effective device for improvement oftitle law and practice, have already been discussed.

Proposed subsection (i) is a logical and necessary concomitant ofsubsections (a)-(h), and tends to be inclusive of all of them. It doesnot appear of record, for example, that a deed was in fact undeliveredor conditionally delivered, but the deed itself recites that the landscovered by it have been and are conveyed as of its date. Also, it maynot appear of record that a grantor under subsection (e) was a marriedman at the time of his conveyance. However, if his conveyance assertsthat he is single, unmarried, divorced or widowed, "the opposite orcontradiction" of the fact that he was married would appear "affirma-tively and expressly in a conveyance ... of record."

It is to be confidently supposed that subsections (a)-(h) will, oftheir own force, perfect titles involving the particular defects specifiedin them, generally after expiration of the grace period, and thereforedispense with the necessity of extinguishing the identical defects byfiling affidavits under (i). Assuming that section 235.46 is retained inits present form, it may still be possible to "cure" defects by "manu-facturing marketability" during the five-year grace period by filingaffidavits, e.g., of identity, during that interim. However, this practicewill be unnecessary if the title thereafter qualifies under subsection (d).

It is, therefore, the function and purpose of subsection (i) to covercases identical in basic principle with those specified in (a)-(h), butwhich do not fall within the specifications of any of those subsections.It is anticipated that such cases will be relatively few in number, andwill principally concern instances of rather complete hiatus of title. Anillustration of such a possibility, with reference to subsection (i), wasgiven at the discussion of subsection (d), supra. A second illustrationmight involve a conveyance which was made expressly subject to acondition subsequent or other defeasance, or made subject to a condi-tional covenant. By affidavit, the nonoccurrence or occurrence of thecondition could be made to appear of record; and, after five years,subsection (i) would enable the bona fide purchaser to rely upon theassertion.

(j) Defects in tax deed. By the provisions of subsection (j), non-existence or illegality of proceedings, from the assessment of real estatefor taxation up to and including the execution of a tax deed, would notdefeat the interest of a subsequent bona fide purchaser whose interestarose five years after recording of such tax deed.61 Thus, this sectionwould accomplish the salutary purpose of removing a common formof title objection which, under present law and practice, often provesinsuperable without formal quiet title proceedings.

61WIS. STAT. §235A6 (1963), provides for an affidavit of possession as primafacie evidence of the fact of possession.

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(k) Interests not of record within 30 years. This subsection, effec-tively a restatement of the ultimate provisions of section 330.15, hasbeen adequately discussed.

VII. SCOPE AND EXCLUSIONS

The scope of the proposed legislation's applicability is found inthe generic statement of interests to be avoided, found in section (1),and discussed above; in provisions specifying instances in which apurchaser is held to have notice of a prior outstanding claim or interest,found in section (2) ; and in provisions expressly excluding specifiedinterest holders and types of realty from the operation of the proposedstatute, which exclusions are found in section (3).

A. GENERIC STATEMENT OF INTERESTS TO BE AVOIDED

No attempt was made in section (1) of the proposal to specify theparticular prior outstanding interests which are affected by its pro-visions.62 This is partly because the interests to which the proposalpertains are largely self-identifying, and partly to avoid the dangersimplicit in the rule expressio unius est exclusio alterius.6 3 Section 235.49seems to have met with little difficulty in its generic statement of in-terests to be avoided, 64 and none is expected with respect to the pro-posed statute.

B. SPECIFICATION OF INSTANCES IN WHICH A PURCHASER

IS HELD TO HAVE NOTICE

Instances in which a purchaser is held to have notice of a priorclaim are specified in section (2). Subsection (2) (a) provides fornotice from use or occupancy. Notice from possession traditionallynegatives bona fide purchaser status. The Wisconsin Supreme Court,in Miller v. Green,65 noted that "the general rule is that possession ofland is notice to the world of whatever rights the possessor may havein the premises."

The theory of the law is that the person in possession may beasked to disclose the right or title which he has in the premises,and the purchaser will be chargeable with the actual notice hewould have received had he made inquiry.66

62As was attempted in Wis. STAT. §330.15(4) (1963).63 "Expression of one thing is the exclusion of another."64 "Conveyance of real estate" as used in WIs. STAT. §235.49 (1963) is defined

in Wis. STAT. §235.50 (1963) as "every instrument in writing by which anyestate or interest in real estate is created, aliened, mortgaged or assigned orby which the title to any real estate may be affected in law or equity .... "

Under this generic definition, a variety of interests have been avoided otherthan those expressly set out. See Boyden v. Roberts, 131 Wis. 659, 111 N.W.701 (1907) (agreement preserving a tract of land for residential purposesonly and executed so as to be entitled to record, held to "affect" title to realestate within the meaning of section 235.50); Cutler v. James, 64 Wis. 173,24 N.W. 874 (1885) (a quit claim deed held to be a "conveyance" withinthe meaning of section 235.49).

65 264 Wis. 159, 162, 58 N.W. 2d 704, 706 (1953).66 Ibid.

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However, the court noted that:

The authorities generally hold that in order that possession mayconstitute constructive notice such possession must be 'open,visible, exclusive, and unambiguous.' It will thus be seen thatthe requirement as to the type of possession that will constituteconstructive notice are practically identical with the requirementsof the type of possession necessary to constitute adverse posses-sion.6

T (Citations omitted.)

The principle that one is chargeable with notice of such rights asdue and diligent inquiry of persons in possession would have disclosedis disarmingly simple of statement, but sometimes extremely difficultof application. The problem cases spring essentially from situations inwhich "possession" by one person is alleged to constitute notice of theinterests of another. Some of these confusions are:

1) Whether A's possession, as claimant of fee title, is notice ofthe unrecorded interest of B, as mortgagee, as lienholder, as easement-holder, as covenantee, as optionee, as spouse of A, or as purchaser, 68

and

2) Whether B's possession, as tenant, licensee, purchaser, or holderof other form of inferior interest derived from A's title, is notice ofthe superior interest of A, again assuming the inferior interest to beunrecorded,69 and

3) Whether C's possession, as tenant in common or joint tenantof D is notice of D's cotenancy, assuming D's interest to be unrecorded.7 0

Another problem, springing from the same generic source, is theproblem of distinguishing "possession," from which notice may bederived, from mere "occupancy," which affords no notice of the rightsof the occupant. Thus, if A is paramount titleholder in actual possession,it is ordinarily held that no notice arises from the fact that W, A's wife,or M, A's mortgagee, or P, purchaser under contract from A, or T, aleaseholder, simultaneously occupy unsegregated portions of the prem-ises. Where possession is "consistent with record title," no notice of in-

67 Id. at 163-64, 58 N.W. 2d at 707.68 It would seem, under the familiar rule, that if possession is referable to a

known right of the possessor, no further inquiry is necessary. First Nat'lBank v. Savings L. & T. Co., 207 Wis. 272, 280, 240 N.W. 381, 384 (1932).The interest of A would give no notice of B's unrecorded inferior interest.BUT SEE Comment, Grantor's Possession as Constructive Notice, 34 Miss.L. J. 325 (1963).

69 Possession by, e.g., a tenant, is notice of his rights. That such possession mayalso give notice of the superior rights of the one through whom the inferiorinterest holder possesses, see Ostergard v. Norker, 102 Neb. 675, 169 N.W. 5(1918).

70 That possession by a tenant in common is not notice of the unrecorded interestof his cotenant, see Tyler v. Johnson, 61 Fla. 730, 55 So. 870 (1911) ; Wilcoxv. Loominster Nat'l Bank, 43 Minn. 541, 45 N.W. 1136 (1890). Also, since acotenant is entitled to possession, there would be no further duty of inquiry.First Nat'l Bank v. Savings L. & T. Co., 207 Wis. 272, 280, 240 N.W. 381, 384(1932).

[Vol. 50


consistent interests arises.71 It is from this principle that the element of"exclusive and unambiguous" possession, as applied to both statutes oflimitations and conventional recording acts, springs.

The approach to these problems adopted for the purposes of theproposed subsection (2) (a) is two pronged. First, notice from actualuse or occupancy of the real estate by any person at the time suchpurchaser's interest therein arises" is specifically stated to extend to,but not to exceed, the notice which "due and diligent inquiry of personsusing or occupying such real estate would, under the circumstances,reasonably have disclosed. . . ." (Emphasis added.) This is a directincorporation of a doctrine often expressed by the Wisconsin SupremeCourt.7 2 By this doctrine, the proposed subsection (2)(a) would orwould not afford notice in each of the suggested areas of problem-casesdependent upon the simple fact-inquiry: Would the occupant, under thecircumstances, reasonably have disclosed the outstanding interest to thesubsequent purchaser? If the occupant's own claim was adverse to,or asserted in fraud of, the outstanding claim, clearly no inquiry ofthe occupant would bring the outstanding claim to light.

The second aspect of the proposed subsection (2) (a)'s approach tothe problem is that each actual occupant or user of the subject premisesis made a potential source of notice for purposes of the statute, becausethe traditional requirement of "exclusive and unambiguous" possessionis expressly lifted. It is lifted here for precisely the reason that it isretained generally as a requirement for title by adverse possession, viz.,the fact that a true owner should not be subject to usurpation of histitle unless the usurper has totally excluded him from use and occupancy,both personal and representative.

It is conceded that this proposed section will relieve the subsequentpurchaser from his present scrupulousness in checking record title onlyby imposing upon him a greater burden of diligence in investigatingphysical use and occupancy, and that the latter burden may be heavierunder the proposed statute than is generally true under conventionalrecording acts. However, it is also true that the subsequent purchaserpresently finds no relief whatever in conventional recording acts fromthe kind of title defects with which the proposals will deal. Conversely,"nonrecording" under conventional recording acts can extinquish legiti-mate interests only where the record itself affords no hint of thoseinterests, and this utter lack of record notice is almost universally dueto the failure of the prior interest-holder to protect himself by promptrecording. Under the proposed legislation, as has been seen, the oppor-tunity for self-protection by record offered the prior claimant is not so

71 First Nat'l Bank v. Savings L. & T. Co., supra at note 70.72First Nat'l Bank v. Chafee, 98 Wis. 42, 73 N.W. 318 (1897) ; Olmsted v. M11c-

Crory, 158 Wis. 323, 148 N.W. 871 (1914).

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universal. Consequently, a requirement that he be rather totally excludedfrom any share of the use and occupancy appears to be justified.

The degree of practical "hardship" which this requirement mayimpose on the subsequent purchaser may seem extreme, until his situa-tion under the proposed subsection (2) (a) is compared with the situa-tion in which he presently finds himself. At present, he is vulnerable tosubstantially every possibility of title defect, regardless of whether heis warned that such defect exists by record or by possessory fact. Hemust scrupulously pursue every suspicious circumstance discovered ateither source; and ultimately, if such suspicions persist, his only safealternative is to refuse to accept title. Under the proposed legislation,he may proceed in spite of the fact that record title is suspicious, if thepossessory fact lends no weight to those suspicions. He is protectedagainst record defects to the extent that the possessory fact does nottend to corroborate them.

Subsection (2) (b) provides that a purchaser has notice of a prioroutstanding claim if the thirty year record affords "affirmative andexpress notice" of such claim. Such notice must, by the provisions ofsubsection (2) (b), conform to the requirements of definiteness setout in subsection (1) (b). Therefore, such notice must refer to the"conveyance, transaction, or event upon which" the interest depends.As is true of the present section 330.15, the measurement of the periodruns backward from "the time at which the interest of such [subse-quent bona fide] purchaser arises in law or equity."

The principal problem foreseen with reference to this provision isthat created by the "pro-tanto" concept, which, whatever its problemsmay be with reference to "purchaser for value," has a clear impactupon the broader doctrine of bona fide purchase. For example, A,ostensible titleholder of record, has entered into an installment landcontract with B, upon which B has made a ten percent deposit. X isholder of a prior outstanding interest dependent for its validity orpriority upon one of the circumstances specified in (1) (a)-(j). WhenA's legal or equitable interest arose, either a grace period or noticeapart from the record prevented his qualification under the proposedstatute; B could qualify as of the time of his land contract, but for thefact that he had paid only a portion of his agreed consideration. Thequestion, assuming that X now records notice of his interest, is whether,following the negotiable instruments principle of "holder in due coursepro tanto," B's right to benefit by the statute should be limited to tenpercent of the land (or its value), or whether his protection shallcontinue through the completion bf his contract and ultimate deed.

A second offshoot of essentially the same problem is presented bythe lease with option to purchase, exercisable at any time prior totermination of the leasehold. If notice of the "prior outstanding interest"

[Vol. so


interrupts the lease period, even assuming that the leaseholder may"hold free" for the balance of his term, is he a "bona fide purchaser forvalue" with respect to his option rights?

By the specification of (2) (b) that notice of the outstanding interestmust come "prior to the time at which the interest of such subsequentbona fide purchaser arises in law or equity,"7 3 the proposals would seekto protect the subsequent interest to the full extent of its equitablepotential. In short, the "pro tanto" concept is rejected, not so much be-cause of any firm conviction that it is a weak or improper jurisprudentialprinciple, but chiefly because of the impropriety and practical difficultyof partitioning lands so as to accommodate it. The same problem, andthe same solution, are familiar law under conventional recording acts,for example section 235.49.

The next step, too, is involved. Having permitted B in the exampleabove to "hold free of" the X claim, despite his ten percent payment,what will happen if B thereafter defaults his contract? Assuming thatthe resultant foreclosure is "strict," so that the unencumbered titlereverts to A, it could be safely assumed that A does not thereby improvehis original position, so as to hold free of X's claim. But suppose thatA's foreclosure is "affirmative," e.g., by sale in enforcement of hisequitable lien, pursuant to judgment of specific performance. Inescap-ably, the purchaser at such sale would succeed to the rights of B, andthis could be true even if A were himself such purchaser.

In negotiable instruments law, the rights of successors to holdersin due course are rather carefully spelled out; but whether or not "re-acquirers" share without discrimination in those rights has been, to alarge extent, a matter of judicial decision. It has been thought preferable,in proposing this title legislation, to leave such highly-circumstantialproblems to the area of judicial decision, confident that familiar equit-able considerations will produce proper results.

The final doubt which may arise concerning (2) (b) is the meaningof the term "affirmative and express notice." Perhaps the term "defi-nite," as used in (1) (b), and there defined, would be preferable. Inany event, the meanings appear to be complete equivalents, and nodifficulty should be encountered.

Finally, subsection (2) (c) makes the quite obvious provision thatif a grace period is provided under subsections (1) (c)-(k), and thepurchaser takes before the grace period has run, the purchaser is heldto have notice of the prior outstanding claim or interest for purposesof the proposed statute.

C. NON-APPLICABILITY OF PROPOSED STATUTE TO

SPECIFIED REALTY AND INTERESTS

The final area in which the scope of the proposed statute's appli-

73 Emphasis added.

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cability is delineated is the provisions of section (3), which excludecertain interests from the operation of the statute altogether.

Interests of governmental units and public utilities are, by sub-section (3)(a), generically excluded from the operation of the pro-posed statute. The justification of the exclusion, which also appears insection 330.15, is the manifest impracticality of protecting the typicalland-interests of such entities against a "nonrecording" statute. Torecord claims in the nature of highway easements, to cite but a singleexample, would involve a complication of metes and bounds descrip-tion of such size as to choke the facilities of the average register ofdeeds office.

"Wild" lands have, by judicial decision, been exempted from theoperation of statutes of limitations, fundamentally on the ground thatordinary possessory safeguards against invasion are neither customarynor practical with respect to them.14 Since the proposed legislationplaces heavy reliance upon normal possessory safeguards to protectlegitimate interests against substantial risk of unfair usurpation, it isthought inappropriate to apply the shortened "grace periods" to "wildlands," at least in blanket fashion; and they are, therefore, excludedfrom operation of the proposed statute by subsection (3) (b).

Subsection (3)(b) contains several "exceptions to the exception,"thus providing that despite the fact that lands may be described as"vild," prior outstanding interests in them dependent for their validityupon certain evidences of title may nonetheless be barred by operationof the proposed statute. These evidences are covered in the "non-recording" provisions of (1) (a), the indefinite reference provisions of(1)(b), the tax title provisions of (1) (j), and the "stale notice" pro-visions of (1) (k). Because of their close alliance to conventionalprinciples of nonrecording, it is felt that the fact that lands involvedin these instances might be termed "wild" is of little relevance.

To describe real estate as "wild" is obviously unacceptable as atechnique of draftsmanship, as is the convenient alternative of describingit simply as "vacant." Neither term has sufficient definiteness or scope.However, when only that real estate which is, at once, "wholly un-platted, vacant and unoccupied, unused, unimproved, and uncultivated"is exempted, there is achieved a fairly exact specification of the typeof lands which, in average experience, may well go without inspectionfor protracted periods of time.

The proposed subsection (3) (b) specifies as the critical time atwhich the "wildness" will exempt the lands from operation of thestatute, "the time at which such subsequent bona fide purchaser's in-terest arises." Such specification may involve a mechanical problem,

,4 Bassett v. Soelle, 186 Wis. 53, 202 N.W. 164 (1925) ; Bino v. Hurley, 14 Wis.2d 101, 109 N.W. 2d 544 (1961).

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in that it affords no significance whatever to the "wildness" of thelands at any time prior to the stipulated time. Hence, if a usurperfalsifies the record of "wild" lands, the true owner is protected againstthe possible "subsequent bona fide purchaser" after the grace periodonly so long as the lands remain in precisely that condition.

VIII. CONCLUSIONMany state have been wrestling with the marketable title problem.

Out of these struggles, a number of statutes have emerged.7 5 While allof these enactments are generically "marketable title" legislation, theyusually approach the problem in one of two ways. First, they may takethe "form" of statutes of limitations. 6 Secondly, the statutes of somestates approach the problem by cutting off adverse interests beyond agiven period, unless notice of the interest has been filed.7 7

The proposed Wisconsin statute would be basically of the lattercategory, relieving parties to a title transaction of the need for clarifyingand correcting the record as to non-current defects. The proposedstatute would reverse the title examiner's inclination to place the worstpossible construction on title defects, and, generally after five years,establish a conclusive presumption that evidence not appearing expresslyand affirmatively of record would, if it were available, prove favorableto marketability. It is in this way that the proposed legislation offersto satisfy the modern need for a more facile and realistic approach tothe determination of the marketability of titles.

75 FLORIDA: FL". STAT. §§712.01-.10 (Supp. 1965), Boyer and Shapo, Florida'sMarketable Title Act: Prospects and Problems, 18 U. MIAmI L. REV. 103(1963) ; ILLINOIS: ILL. REV. STAT. ch. 83, §§12.1-.4 (Supp. 1965), Rohde, lli-nois Marketable Title Act, 39 CHL-K NT L. REV. 49 (1962); INDIANA: IND.STAT. ANN. §§56-1101-1110 (Bums Supp. 1966), Note, The Indiana MarketableTitle Act of 1963: A Survey, 40 IND. L. J .21 (1964) ; IOWA: IowA CODE ANN.§§614.17 (1958), Basye, Trends and Progress-The Marketable Title Acts, 47IOWA L. REv. 261 (1962); MASSACHUSETTS: MAss. GEN. LAws ANNO. 184§§26-30 (Supp. 1965), Note, The Massachusetts Marketable Title Act, 44 B.U. L. REV. 201 (1964) ; MICHIGAN: MIcE. STAT. ANN. §§26.1271-.1279 (1953),Forty Year Marketable Title Act, 35 MIcH. S. B. J. 12 (August, 1956) ; MIN-NESOTA: MINN. STAT. ANN. §541.023 (Supp. 1965); NEBRASKA: NEB.REv. CODE §§76-288-298 (1958); NORTH DAKOTA: N. D. CENT. CODE §§47-19A-01- 11 (1960), Leahy, The North Dakota Marketable Record Title Act,29 N. D. L. REV. 265 (1953); OHIO: OHIO REv. CODE §§5301.47-.56 (1964),Smith, The New Marketable Title Act, 22 OHIO ST. L. J. 712 (1961); OKLA-HOMA: OKLA. STATS. ANN. 16 §§71-81 (Supp. 1965), Simes, The Improve-ment of Conveyancing: Recent Developments, 34 OKLA. B. J. 2357 (1963);SOUTH DAKOTA: S. D. CODE §§51.16B01-.16B14 (1960); UTAH: UTAHCODE ANN. §§57-9-1-9-10 (1963), Swenson, The Utah Marketable Title Act,8 UTAH L. REV. 200 (1963).

76 Illinois, Indiana, Iowa, Minnesota, Massachusetts, Ohio, Wisconsin. Cf. textaccompanying note 18 supra.7 7 Florida, Michigan, Nebraska, North Dakota, South Dakota, Utah.

1966]

Documents

Proposed Title Legislation: A Suggested Solution to the