Buchanan v. Lorman

| Md. | Jun 15, 1845

Archer, O. J.,

delivered the opinion of this court.

The complainants seek to vacate a sale made by George Torrance to Eliza S. Buchanan, of one undivided fifth part of the Warren Factory, on the 16th day of April 1829, on which day she executed her bond for the purchase money, and to enjoin the defendants from proceeding to collect the amount of the purchase money. Suit having been instituted in Baltimore county court on this bond, judgment was confessed by the defendants on the 12th of December 1832, and proceedings having been instituted in the superior court for the county of Ohio, in the State of Virginia, as a court of equity, to subject certain funds and lands of the obligors in the bond to sale for the payment of the said judgment, and a decree having passed thereon, and certain portions of the property having been sold, the bill further prays, that the defendants may be enjoined from further proceeding upon their decree in the superior court of chancery, for the county of Ohio, in the State of Virginia, that the sale reported in said cause of James Buchanan’s land may be vacated, and the said William and Alexander Jjorman enjoined from receiving a conveyance for-said land, or in any manner alienating or disposing of the same; or that the said William and Alexander Lorman may be decreed to hold the same in trust for the heirs of James A. Buchanan, or his assigns, and for general relief.

It appears, from the bill, answer and exhibits, in the case, that after tire contract of sale made by Torrance to Eliza Buchanan, that Torrance, on 13th of August 1830, mortgaged his interest in the property sold to William Eulford, to indemnify him as endorser for Torrance to the extent of $11,000, and on tlie 30th of November 1831, he mortgaged the same property to William, and Alexander Lorman, to secure the payment of i!p7500. These mortgages, on their face, were declared to be subject to the operation and effect of, as well a bond executed by Torrance to Eliza Buchanan, on 20th April 1829, for the conveyance to her upon the terms therein expressed of the aforesaid one undivided fifth of the Warren Factory, as of a mortgage of said interest, in connexion with other property executed by Torrance to Fulford, on 13th of August 1830. On the 17th of May 1834, William Fulford and George Torrance executed an assignment of the mortgage of the 13th of August 1830, to W. and A. Lorman. On the 12th of May 1835, W. and A. Lorman filed their bill in Baltimore county court against George Torrance for a foreclosure and sale of the property thus mortgaged. To this bill Eliza Buchanan was not made a party, but the defendant, Torrance, voluntarily appeared, confessed the facts in the bill, and consented to a decree. On the 10th of October, Baltimore county court decreed a sale. On the 28th of January 1836, the trustee appointed to sell the mortgaged premises reported the sale to the court, and the same was, by the court, on the 26th of February 1836, finally ratified and confirmed. On the 1st of July 1836, John Glenn, the trustee, in pursuance of the decree conveyed to the purchaser the one undivided fifth of the Warren Factory, thus sold to the purchaser.

Anterior to the above decree in Baltimore county court, P. F. Dawson, F. Dawson, and the Warren Manufacturing Company, alleging that John T. Barr had recovered a judgment against George Torrance, which was assigned to them, prayed to be, and were, by the court, made parties; and in then-answer to the bill of W. and F. Borman, allege, that the complainants have other securities for their debt, consent to a sale, and pray that the money may be brought into court to abide the decision of the court. The proceeds of sale amounting to $17,230, were distributed, $10,130, to W. and A. Borman; to the Warren Factory, $6422.15, by an agreement between W. and A. Borman, and P. F. Dawson and F. Dawson, filed on the 11th March 1836. By this agreement no more than $10,130 was to be applied to the payment of the mortgages exhibited in the cause; and it was agreed, that for the remaining balance due on said mortgages, W. and A. Borman were to look to certain property of James A. Buchanan, in or near the town of Wheeling, which had been attached, <fcc.; and in consideration of $1000, P. F. and F. Dawson agree, that they will never interfere with Buchanan’s property in Viringia, and W. and A. Borman agree, that the balance of the proceeds of sale shall be paid to P. F. and W. Daioson.

Anterior to these proceedings in Baltimore county court, as a court of equity, to wit, on the 12th of December 1832, Torrance, for the use of Fulford, W. and A. Borman, had obtained a judgment in Baltimore county court against the securities of Eliza Buchanan, who had survived her, for the purchase money. And, also, anterior to said proceedings in Baltimore county court, as a court of equity, George Torrance, W. and A. Borman, and W. Fulford filed then bill in the superior court of law and equity for Ohio county, in the State of Virginia, against the securities of Eliza Buchanan, on her bond for the purchase money, alleging the execution of the bond, the judgment in Baltimore county court, that it was paid, and praying to subject the lands of J. A. Buchanan to sale, for the payment of the said debt; and that funds in tbe bands of certain debtors of lire said J. A Buchanan should also be condemned for tbe payment of tbe said judgment. On the 6th of November 1835, the superior court for the county of Ohio decreed, that Jumes A. Buchanan should pay to the complainants in that proceeding, on a day named, the sum of $24,744, with legal interest until paid, and costs, tbe said sum being tbe amount then found to lie due on the bond of Eliza Buchanan, that a certain tract of land in tbe bill mentioned should be sold to pay tbe amount decreed, unless within tbe time specified, the said amount should be paid, and that tbe debtors of James A. Buchanan, who had been made parties, should pay to the complainants tbe sums in their hands belonging to him, and that as to the residue of tire lands mentioned in the proceedings, the bill should be retained for future decree; and as to the other defendants, the bill was dismissed. A sale under tbe decree was accordingly effected on the 30th day of July 1836, and tbe said William and Alexander 'Lorman became tbe purchasers. No further proceedings appear to have taken place in the Virginia court in the above case.

The complainants insist, that Torrance, by his acts, since the contract of purchase and sale, has disabled himself from complying with bis contract, in making a title to his vendee, and that as by sucb acts tbe consideration upon which the bond has been given has failed, the contract of sale should be rescinded, and that die judgment obtained upon the bond given for tbe purchase money should be perpetually enjoined.

A vendee of an estate, in an unexecuted contract, is entitled to have that for which be contracts before be can be compelled to part with tire consideration bo agreed to pay. Tbe ability of the vendor to convey should exist, when bis duty, by the contract, arises to convey, or at the time of a decree for a conveyance, where time is not of the essence of the contract. And we conceive it to be equally clear, that a vendee is not bound to take an estate fettered with incumbrances, by which he may be subjected to litigation to procure bis title. These principles are so obviously just, that they must be considered as resting at the foundation of every well regulated system of equity.

The admissions and facts in the cause show, that mortgages were, after the contract of sale, executed to secure to the mortgagees the payment of $18,500; that a bill was filed to sell the mortgaged premises to pay the mortgagees, and that a decree passed to sell the same, and the trustee was directed by the decree to convey to the purchaser the right of the mortgagor and mortgagees, which was executed by a sale in January 1836, and a deed accordingly executed to the purchaser in July 1836; in strict conformity with the terms of the decree. To this decree the vendor voluntarily consented, and assented to part with his title There can be no doubt but that this decree and sale operated to extinguish the vendor’s title, and to pass it to the purchaser. The argument which has been urged, that these mortgages and this decree only operated to pass so much of the purchase money due to Torrance as these mortgages called for, cannot be sustained, because, by the deeds themselves, the legal title passed to the mortgagees, and the mortgagees do not seek to subject to sale so much of the debt due to Torrance from Eliza Buchanan as would extinguish the mortgages, but they ask that the land mortgaged shall be sold to pay the amount of their lien, and the decree follows the prayer of the bill, and tire assent given by the answer of Torrance, and directs the land to be sold, and all the rights of the complainant and defendant to be conveyed, upon a compliance with the terms of sale to the purchaser.

It thus appears, that when the contract of sale had ripened into maturity, Torrance, the vendor, by his • own consent, as evinced by his acts, and by his answer to the bill in equity, had stripped himself of every vestige of title, legal or equitable, in the land he had sold, and was, himself, in consequence of these proceedings, in no condition to comply with his contract to convey, and had no legal capacity to enforce a re-conveyance of the title to him, so that he might comply with his contract.

It is true, that Eliza Buchanan was no party to these proceedings, and was, therefore, in no manner bound by them; and that she might, perhaps, have been competent, by applying as much of the purchase money as would have fully indemnified the purchaser, on the institution of proceedings in chancery have coerced a conveyance upon the ground, that the mortgages were originally made subject to her contract of purchase, and that the purchaser under the decree in the county court took his title with notice of this condition and agreement. But although this may be so, it by no means relieves the case from the difficulties which surround it. - For Eliza Buchanan, the vendee, was in no manner bound to take a title thus em barrassed, and to embark in a lawsuit against an adversary claimant, to obtain that, by delay, by perhaps expensive and protracted litigation, which, by the principles of law applicable to her contract, she had stipulated to -have without delay, and without expense or litigation.

It has been argued that the complainants could, at all events, be only entitled to relief by averring a readiness to comply on the part of the vendee. If the vendee had gone into equity to compel a specific execution of the contract, she must have averred a compliance, on her part, with the terms of the contract, or to have offered to pay the purchase money. But this bill seeks a rescission of the contract, on the ground of a want of title, and a payment, or offer to pay, was unnecessary. To have paid the purchase money could not have strengthened the equity of the complainant. “Chancery requires no act to be done in vain: it therefore, could not require the payment of the purchase money in this case, or an offer to pay it after the defects in the title had become known,” McLean, It. 86.

The case of Hart and Blight, 3 Monroe, 273, has been cited by the appellees as a case analogous to this. But it will be found, from an examination of that case, that the vendor, at the time when the conveyance was to have been made, was in a condition to comply with his contract, and had, for a year afterwards, his title unembarrassed. It was the fault of the vendee that he had not, by paying the purchase money, put himself in a condition to demand a specific execution of the contract; and having been in default in complying with his contract, but for which he could have had a conveyance, it was conceived that he was not entitled to enjoin the collection of the purchase money, and that he should be diiven to his remedy against, the vendor, or against the purchaser under the judgment.

But in the case before us, long before the stipulated time for the completion of the payments of the purchase money, and more than three years before the vendee could have called for the conveyance of the title, the vendor had parted with his title, and was utterly unable to comply with his contract to convey the land.

If we are correct in the above views, the consideration' for the contract having wholly failed, Torrance, or his assignees, who stand in his stead, ought not to be allowed to recover the purchase money for the land sold, and as the judgment in the county court, sought to be stayed, was obtained on the bond for the purchase money, the defendants ought to be perpetually enjoined from instituting any proceedings to enforce its payment

The complainants conceiving that a perpetual injunction on the judgment obtained in Baltimore county court ivould furnish them with inadequate relief, if the defendants were permitted to reap the fruits of a decree, obtained against James A. Buchanan, seek further to enjoin them from proceeding to execute the decree obtained in November 1835, in tire superior court of law and equity for Ohio county in the State of Virginia.

At the time of this decree, an equity existed on the part of the present complainants, to relief. The property sold was then encumbered with the mortgages to Fulford and W. and A. Lorman; the bill of the mortgagees had been filed in Baltimore county court, and a decree had been obtained to sell the mortgaged premises with the consent of Torrance, to satisfy these liens. Had these defences, which then all existed, been brought by way of defence to the notice of the court of equity in Virginia, we are bound to believe, that no decree would or could have passed against James A. Buchanan, until the estate sold should have been relieved from its embarrassments; and until the vendor, by so doing, could have shown himself in a condition to have passed the title to the vendee or her representatives.

That the court in Virginia possessed jurisdiction of the case decreed upon by them, has not been, and could not be denied. The decree must be considered as conclusive, as to the merits upon the equities existing anterior to the decree, and as having all the efficacy of a domestic judgment or decree, and it could not there be examinable upon any ground of equity existing prior to the decree; and as it could not, upon such ground, be examinable in Virginia, we are legally incompetent to examine it here. But if an equity has arisen subsequent to die decree, which would make it inequitable in the defendants to enforce that decree upon such new and subsequent ground of equity, not existing at the time of the decree, the law, as we apprehend, would fully justify the complainants in demanding the interposition of this court, in restraining the defendants from enforcing the decree.

When the decree in Virginia was passed in Nov. 1835, the period had not arrived, when by the terms of the contract, Torrance was bound to convey the land sold to the vendee. Ho had until 1839 to fulfil his part of the contract; although he had created incumbrances on the estate, he might have removed them, and although a decree had in October 1835, passed in Baltimore county court for the sale of the land, which by contract he was to convey, it was in his power to have prevented the sale, by paying the costs of the chancery suit, in Baltimore county court, and the liens for which the land had been decreed to be sold. This, however, he did not do, but suffered the decree to be executed by the sale of the land in January 1836, which event occurred after the decree of the superior court of Virginia, by which event occurring after said decree, he had effectually placed it, out of his power, either to convey, or to procure the title to the land he had contracted to convey.

Leaving out of view, therefore, all the acts of Torrance anterior to the date of the decree in Virginia, as upon this branch of the subject, not properly examinable, being foreclosed by the decree, the fact of the sale afterwards, by which he has disabled himself from complying with his contract, has created a new ground of equity in the complainants, which calls upon this court for the exercise of its restraining authority. This, however, can only be accomplished through the person of the defendant, who is within the jurisdiction of this court, and will not enable the court, as prayed by the complainants, to vacate any of the proceedings which have taken place under the Virginia decree. The defendant ought, therefore, to be enjoined seeking to enforce his decree, from accepting a conveyance of the lands purchased under said decree,- or if he has obtained a title, he ought to be decreed to reconvey the same to the heirs of James A. Buchanan.

From the views we have taken of this case, the contract of purchase must be rescinded; and it is insisted,- that it should be upon the condition of paying to the vendor interest on the purchase money, and an equivalent in value for the deterioration of the property, during the continuance of the possession of the vendee.

For any deterioration of the property sold by the improvidence, or culpable negligence of the vendee, her representatives should be answerable, but not otherwise. 2 Dana, 375.

If the vendee were put in possession of the land, for all the time it was occupied by her, or her agents, she should be made' to account for the rents and profits. It has been contended, that interest should be allowed for the use of tire land, instead of rents and profits. The general rale may be, that when the purchaser is let into the possession and the perception of the rents and profits, he ought to pay interest on the purchase money; the buyer, being the owner of the land, must rest satisfied with the rents and profits, and the seller, the owner of the money, is entitled to interest. But as there is, generally, a great disproportion between the rents and profits, and tire interest of the purchase money, there would be no propriety in applying the rule to a case where the sale was rescinded. In such a case, a court of equity could never treat the vendor as entitled to the purchase money, or consider the vendee as the owner of tire land. These views will be found to be sanctioned by 3 Leigh ¡ 647, 648; a different rule would seem to have prevailed in some of the States, 2 Dana, 375; but we cannot adopt the principle of that case, because we think it would operate injustice.

There is, however, iro legal evidence in the case, going to' shew the possession of the vendee, or its duration, or whether the deterioration of the property proceeded from casualty or negligence, or the value of the rents and profits, and therefore again remand the cause to the court of Chancery, that evidence may be taken on these subjects, in order that justice may be effectuated between the parties.

CAUSE remanded.