What is the SOL for an Action to Cancel a Deed Procured by Fraud?
March 11, 2014 § 7 Comments
SOL is a vernacular phrase that means, essentially, that one has run out luck, or words to that effect. SOL is also an acronym for Statute of Limitations. Both mean the same thing.
Statutes of limitation (SOL) are, by definition, statutory creatures of the legislature. In our state, there is a general three-year SOL for most actions, including those based on fraud. And, there is a ten-year SOL to recover land.
So, which SOL applies to an action to cancel a deed procured by fraud?
That was the question before the MSSC in the case of Lott and Saulters v. Saulters, decided January 23, 2014, in which Ralph Saulters filed suit to cancel Brenda Lott’s deed from their mother, Frances, based on fraud, and Brenda and her mother sought a dismissal based on SOL. Here is how Justice Chandler addressed the issue for the majority:
¶7. Brenda and Frances argue that Ralph’s claim for cancellation of Brenda’s deed falls under the general, three-year statute of limitations because it alleges fraud. This requires us to address the question of whether an action to cancel a deed that was fraudulently conveyed falls under the three-year statute of limitations governing actions based on fraud, or if it falls under the ten-year statute of limitations governing actions to recover land. We hold that, where a plaintiff alleging a possessory interest in the land brings an action to clear title or to recover land obtained by fraudulent conveyance, that action is governed by the ten-year statute of limitations.
¶8. Actions to recover land are subject to the ten-year statute of limitations found in Mississippi Code Sections 15-1-7 and 15-1-9. In relevant part, Section 15-1-7 provides:
A person may not make an entry or commence an action to recover land except within ten years next after the time at which the right to make the entry or to bring the action shall have first accrued to some person through whom he claims, or, if the right shall not have accrued to any person through whom he claims, then except within ten years next after the time at which the right to make the entry or bring the action shall have first accrued to the person making or bringing the same.
Miss. Code Ann. § 15-1-7 (Rev. 2012) (emphasis added). Similarly, Section 15-1-9 provides:
A person claiming land in equity may not bring suit to recover the same except within the period during which, by virtue of Section 15-1-7, he might have made an entry or brought an action to recover the same, if he had been entitled at law to such an estate, interest, or right in or to the same as he shall claim therein in equity.
Miss. Code Ann. § 15-1-9 (Rev. 2012). A suit to remove a cloud on title is considered an action to recover land. O’Neal Steel, Inc. v. Millette, 797 So. 2d 869, 873 (Miss. 2001).
¶9. Unlike the legislatures of most states, our Legislature has not created a statute setting a shorter limitations period on actions to recover land obtained by fraud; in fact, Section 15-1-9 states that actions to recover land based on fraud will have a ten-year statute of limitations:
A person claiming land in equity may not bring suit to recover the same except within the period during which, by virtue of Section 15-1-7, he might have made an entry or brought an action to recover the same, if he had been entitled at law to such an estate, interest, or right in or to the same as he shall claim therein in equity. However, in every case of a concealed fraud, the right of any person to bring suit in equity for the recovery of land, of which he or any person through whom he claims may have been deprived by such fraud, shall be deemed to have first accrued at and not before the time at which the fraud shall, or, with reasonable diligence might, have been first known or discovered.
Miss. Code Ann. § 15-1-9 (Rev. 2012) (emphasis added).
¶10. We have twice applied the ten-year statute of limitations in cases where fraud was alleged in an action to recover possession of real estate. Jones v. Rogers, 85 Miss. 802, 38 So. 742, 748 (1905), overruled on other grounds by Kennedy v. Sanders, 90 Miss. 524, 539-40, 43 So. 913, 915 (1907); Aultman v. Kelly, 109 So. 2d 344, 349 (Miss. 1959). In Jones, we explained–in the context of an action to recover land–that to take advantage of the concealed-fraud provision of Section 15-1-9 quoted above, plaintiffs must allege “that complainants did not discover or know of this fraud over 10 years before instituting their suit.” Jones, 85 Miss. 802, 38 So. 742, 748 (1905) (emphasis added). Likewise, in Aultman, where heirs sought to cancel a mineral deed they alleged was procured from their father by fraud, we stated that the heirs “were required to institute a suit within ten years from the accrual of their right.” Aultman, 109 So. 2d 344, 349 (Miss. 1959).
¶11. We disagree with the Fifth Circuit’s interpretation of Mississippi law on this issue in Suthoff v. Yazoo County Industrial Development Corporation, 722 F. 2d 133 (5th Cir. 1983). [Footnote omitted] In it, the Fifth Circuit applied a three-year statute of limitations to an action where the plaintiffs alleged that they were fraudulently induced to sell land under the auspices that their property would be condemned. Suthoff, 722 F. 2d 134-35 (5th Cir. 1983). The court acknowledged that “the ten-year period for the recovery of land has been applied in two actions in Mississippi to set aside conveyances allegedly procured by fraud,” but noted that no Mississippi court had decided “the precise issue [of] whether such an action is governed by the statute relating to actions for fraud or the statute relating to actions to recover land.” Id. at 137.
¶12. In applying the shorter statute of limitations, the Fifth Circuit followed the rule used by the majority of states. We decline to follow this majority rule, because, as mentioned above, the Mississippi Legislature, unlike the majority of states, has not created a statute setting a shorter period of limitation on actions to recover land on the grounds of fraudulent conveyance. A case from Utah, cited in Suthoff as support for this majority rule, explains the majority rule and illustrates why it should not be the rule in Mississippi given our current statutory scheme:
The legislature of this state, as in nearly all other states, has seen fit to fix a shorter period of limitation upon actions for relief upon the ground of fraud or mistake than for recovery of possession of real estate. This is for the very cogent reason that a person claiming to have been defrauded or to have been induced to enter into a contract by mistake should not be permitted to allow a great length of time to elapse after discovery of the fraud or mistake before instituting his suit . . . .
Davidsen v. Salt Lake City, 95 Utah 347, 81 P.2d 374, 376-77 (1938) (emphasis added).
¶13. Because our Legislature has not created a law shortening the time to bring an action to recover a fraudulent conveyance, and because our current statutory law imposes a ten-year statute of limitations for actions to recover land based on fraud, we decline to adopt the majority rule. We hold that, where a plaintiff alleging a possessory interest is seeking to regain title to land lost by a fraudulent conveyance, or to clarify his own title clouded by fraudulent conveyance, the action still falls under the ten-year statutes applying to actions to recover land, despite the presence of allegations of fraud. [Fn 3]
[Fn 3] We note that an action to cancel a fraudulent conveyance can fall under the three-year statute of limitations where the plaintiff does not allege a possessory interest in the land. See O’Neal Steel, Inc. v. Millette, 797 So. 2d 869 (Miss. 2001), holding that the three-year statute applied where a plaintiff-creditor sought to cancel a deed the defendant-debtor conveyed to a third party in order to avoid a judgment lien. We further note that today’s decision overrules McWilliams v. McWilliams, 970 So. 2d 200 (Miss. Ct. App. 2007), in which the Court of Appeals erroneously applied the reasoning of Millette, incorrectly applying the three-year statute where a plaintiff sought to recover land he allegedly was fraudulently induced to convey.
All of the language quoted above is important, but Footnote 3 is extremely important to understanding how the two SOL’s apply in different situations involving cancellation of a deed. I also found it interesting that a COA decision was overruled in a footnote. Just goes to show that if you don’t read every word, you might miss something crucial.