Reid v. Gorman

158 N.W. 780 | S.D. | 1916

Lead Opinion

WHITINÍG, J.

Plaintiff, the assignee of a certificate of sale upon foreclosure of real estate mortgage, brought this action seeking a 'decree requiring the 'defendant Dunn, as sheriff, tO' issue to him, a sheriff’s deed on such foreclosure, and seeking to quiet his title to the land described in his certificate as against the claims of any of th-e defendants and especially against those of the defendant Gorman. Gorman claims an interest in and to said land as a redemptioner from the above-mentioned foreclosure sale; he claims that, as an attachment lienor claiming to hold an attachment lien upon said land, he tendered to- the plaintiff the amount necessary to redeem from the foreclosure sale and, after the refusal of plaintiff to accept -the same, did, within the period provided by law for redemption, pay the amount necessary for such redemption to the defendant Dunn as> sheriff.' This appeal is from an order of the circuit court overruling Gorman’s demurrer to the plaintiff’s reply.

The facts as presented by the demurrer are in brief as follows: One M., being the owner of the land in question subj ect to the mortgage upon which the above-mentioned foreclosure was afterwards made, entered into an executory contract with one L-, whereby M. contracted to sell the said land to' E. subject to the said mortgage, and to convey the same by warranty deed upon payment of foe agreed consideration, a part of which, consideration was paid upon the execution and delivery of such 'Contract; the balance to be thereafter paid. L. entered upon said land, but afterwards abandoned it, and without making any further payments', brought an action against M. for the rescission, of the contract. At the time of instituting such action, L. filed in the proper office a notice of lis- pendens. M., answering L.’s complaint and by way of counterclaim, alleged the full performance by him of the covenants of said contract, among other things alleging that under 'date of said contract he •had made a warranty deed conveying said land to L., and that, subsequent to the commencement of that action, he had tendered the said deed to L., and, after such tender and refusal, had deposited it in a depository theretofore agreed upon by the parties. M. prayed a money judgment for the balance due him under such contract and for a foreclosure sale of the said land to pay such judgment. In such action, a judgment was rendered wherein it was found that Iv. had been the “owner” of the said land ever since the date of the contract and wherein a foreclosure sale was decreed. Besides confessing the action between L. and M., the facts therein pleaded, and the judgment therein rendered, the demurrer confesses the existence of the facts pleaded in the action of I/, against M.; such facts being separately pleaded. After the commencement of the action of L. against M. and the filing of the notice of lis pendens therein and the interposing of M/s counterclaim but before judgment therein, Gorman brought an action against M. and another, wherein a money judgment was demanded and wherein an attachment was issued on behalf of Gor-man and levied upon the land ¡involved herein. In that action Gorman obtained a judgment against the defendants therein. The mortgage above mentioned not having been paid, it was foreclosed, and, upon the foreclosure 'sale, plaintiff’s assignor became the purchaser; and thereafter, as above noted, Gorman, claiming to be a redemptioner under and by virtue of his attachment lien, made the offer of redemption to plaintiff and the payment to the sheriff.

[1] Respondent contends that the .appellant was bound by the notice of lis pendens, and that by reason thereof he is bound by the decree in the action of L. against M. the same as though he had been a party thereto. If this were true and we should give to the word' “owner” as used, in such decree its common acceptation, such decree w.ould be an adjudication-, ¡binding upon appellant, adjudging that M. had, at the time of the lévy ¡of appellant’s attachment, no interest in said land ¡subject to attachment. Inasmuch as the facts pleaded in this aotion — in so far as they relate to> the rights of L. and M. under the contract between them — are the same as the facts that were pleaded in the counterclaim' of M. in tíre action of L. against M., the bringing of such action of L. against M., the filing ¡of the notice of lis; pendens, and the entry of" judgment therein, became of littlet moment because the judgment therein could not and did not deprive appellant of any rights which he otherwise would have ha/d against this land. It is not necessary for us to determine whether or not the judgment rendered in the action of E. against M. was warranted by the facts pleaded. The relief demanded in such action was only such relief as the defendant .therein was entitled to under, the facts alleged in his counterclaim. It follows that, if such judgment — in decreeing that L. became the “owner” of the land on- the day the contract was entered into — went further than the facts pleaded and the relief demanded warranted, rhe judgment to such extent was invalid as against appellant, and he could not be -bound thereby -even though a notice of lis pendens was filed. Section 634, Pomeroy’s Eq. Juris!; 25 Cyc. § 1476. We may therefore entirely disregard! the fact that there ever was -an action between E. and M., and consider -only the question of whether or not, under the facts confessed, M., at the time of the levy of the attachment, had an interest in said land that could -be and was reached through the attachment levy. If he had then appellant through such levy became a redemp-tioner entitled! to redeem -such land from the foreclosure sale.

[2] If the deed made by M. and- tendered to and refused by E. h'ad the effect of transferring to E- the legal title to -this land, there was left in M. nothing but a personal claim against E- which- could not in any manner be reached through- this attachment levy. But it is certainly recognized -by all authorities that, before title -can pass through a deed, there must be a delivery of such deed, and- that an essential element in delivery is the acceptance of the deed by or -on behalf of -the grantee. Devlin, § 285; 3 Washburn, Real Property (5th Ed.) 310. It is therefore clear -that the legal title to this land was held by M. at the time o-f the levy of appellant’s attachment.

Inasmuch as the deed tendered by M. was mot accepted, the relations of M. to L. — the rights- and obligations o-f each of them under the contract — were in no manner altered by such tender, except that it had -the effect of putting E. in default. 'Such tender of deed in no m-anner changed M.’s rights or-his interest in and to the said land. Wh.at the rights of- M. and L. were under the contract is well settled under all the authorities. It certainly has become settled in this state under the line, of decisions ending with that in the case of Phillis v. Gross, 32 S. D. 438, 143 N. W. 373. Immediately upon entering' into such contract, L. became possessed of an equitable interest or estate in said land. M., while continuing to be vested with the legal title of said land, held such title in trust for the benefit of L. and under an obligation to transfer the same to L. whenever 'L. should have acquired the right to be vested with such title; but M. also held such legal title as security for the payment to him of 'the balance remaining unpaid under such contract. As stated by Pomeroy, at section 1260 of 'his Equity Jurisprudence:

“Although possession may have been delivered to the vendee, and although under the doctrine of conversion the vendee •may have acquired an equitable estate, yet the vendor retains the legal title, and the vendee cannot prejudice that legal title or do-anything by which it shall be divested, except by performing the very obligation on his part which the retention of such title was intended to secure — namely, by paying the price according-, to the terms of the contract. To call this complete legal title a lien is certainty a misnomer. In case of a conveyance, the grantor has a lien, but no title. In case of a -contract for sale before conveyance, the vendor has the legal title, and has no- need of any lien; his- title is a more efficient security since the vendee cannot -defeat it by any act or transfer even to or with a bona fide purchaser.”

This interest which E. had in said land, by virtue of such contract, is sometimes spoken of as an equitable title. We think this term inaccurate, and that there never can, strictly speaking, be an}r “equitable title” except where there is a present right in the person tod be vested- with the “legal title”; in other words, there can- be no -equitable title until, by- fulfillment of -the covenants of the contract, the vendee has become -equitably entitled to the legal title, has become entitled- to- a decree of specific performance. As stated by W-arvelle, at section 176:

“The essential feature of an equitable title is that it is one which appeals to equity for confirmation and enforcement. Plence a mere contract or -covenant to convey at a future time on the ■purchaser performing certain acts does not create an- equitable title. It is only when thq purchaser .performs or tenders performance of all the acts necessary to' entitle him to a deed that he has an equitable title and may compel a conveyance. Prior thereto 'he has, at best, only a contract for the land when he shall have performed his part of the agreement.”

[3] However, it makes very little difference whether we speak of this interest held by the vendee as an equitable estate or an equitable title. The interest of the vendee remains the same whatever name be given it, and -the vendor still remains the holder of the legal title to- secure his rights under the contract. Is this interest of the vendor an .interest subject to the lien of a judgment, and therefore subject to levy and sale under attachment and execution? As stated by the author of the notes found in 57 L. R. A, pp. 643-654:

“It will be seen that the decisions involving the lien of a judgment against the vendor are not in harmony, but it will also be noticed that the conflict is not caused by any differences of judicial opinion as to the soundness- of the doctrine -that the vendee takes an equitable title to the property. They are all in accord as to the nature of the title and interests of -the respective parties. The only point of difference between them is as to whether the substantial interest which remains in the vendor, and for the payment of which he holds the legal -title as security, is subject to the lien of a judgment.”

We believe that, under the overwhelming weight of authority, su-oh interest is subject to- the lien of a judgment and can be reache/d through air attachment of th-e land. Of the cases recognizing this rule, we cite a few: Dalrymple v. Security L. & T. Co., 11 N. D. 65, 88 N. W. 1033; Doak v. Runyan, 33 Mich. 75; Moyer v. Hinman, 13 N. Y. 180; Marston v. Osgood, 69 N. H. 96, 38 Atl. 378; Holman v. Creagmiles, 14 Ind. 177; Lefferson v. Dallas, 20 Ohio St. 69; Stewart v. Coder, 11 Pa. 90; Hardee v. McMichael, 68 Ga. 678; Coolbough v. Roemer, 30 Minn. 424, 15 N. W. 869; Filley v. Duncan, 1 Neb. 134, 93 Am. Dec. 337, and notes page 353; McMullen v. Wenner, 16 Serg. & R. (Pa.) 18, 16 Am. Dec. 543; note to Keirsted v. Avery, 4 Paige, (N. Y.) 9; Kinports v. Boynton, 120 Pa. 306, 14 Atl. 135, 6 Am. St. Rep. 706; Wehn v. Fall, 55 Neb. 547, 76 N. W. 13, 70 Am. St.Rep. 397; Snyder v. Martin, 17 W. Va. 276, 41 Am. Rep. 670; Hope v. Blair, 105 Mo. 85, 16 S. W. 595, 24 Am. St. Rep. 366; McLaurie v. Barnes, 72 Ill. 73; Green v. Daniels, 53 C. C. A. 379, 115 Fed. 449; 39 Cyc. 1657, 1658; 17 Am. & Eng. Encv. Law (2d Ed.) 780; Black on Judgments, § 438; Freeman on Judgments, § 363. At section 364, Freeman- on Judgments (4th Ed.), the learned author, makes statement that:

“It is everywhere conceded that a judgment lien accruing against a vendor after the making -of the contract of. sale extends to all his interest remaining in the land, and entitles the purchaser at the sale to all sums still to 'be paid by vendee.”

Later, in section 181, Freeman- on Executions (3d Ed.), this same author recognizes that the rule is 'different in four states; ¡but he says:

“W-e are, however, entirely unable to understand how the interest of a vendor, while he retains the legal title, and has the right to continue to retain it, because the contract of purchase has not been performed, can be held not subject to execution to the extent of transferring by an execution sale the precise --interest held by the vendor.*

In those states where there are decisions not in harmony with the majority rule, it will -be found that general^ there was involved the -conflicting' claims of a vendee in possession and the party -claiming under execution or attachment sale against-vendor. Such cases will be found to turn upon the fact that possession was taken and retained by-the vendee. We do not believe -a single authority could be found holding the vendor’s interest not subject to be reached by a lev)!- on the land, where, as in filis case, at the time of levy the vendee had abandoned the land- and was denying the validity of the -contract. Under such facts, there is left no- -one- with any right or interest, legal or equitable, that can authorize him to question a creditor’s right -to proceed against the land.

It is an established rule of law that -an equitable estate in lands, such as that of a vendee under an executory contract, is not subject to the lien, of a judgment or to levy under attachment or -execution in the absence of some statute authorizing same. It would follow that, if the interest of the vendor was not subject to- lien of judgment, all that would be necessary in order to put land -where it would be free from judgment liens would be for the owner to enter into an executory contract for its sale.

' Inasmuch as plaintiff is seeking relief in equity, it might not be improper to note the results that would flow under each contention urged before us. The land in question is alleged to be worth $6,500. This allegation is undisputed. The foreclosures sale was for $3,485. That amount with interest measures plaintiff’s equitable rights. This amount, to-wit, $3,724.89, was tendered him and has been paid to the sheriff as redemption money. Under no principle of justice 'is he entitled to- another cent. This leaves an equity of nearly $3,000 belonging to M. Justice and equity demand that M. get the benefit thereof. This he would get through the application of same to the payment of Gorman’s claim. Gorman’s claim' is- in exceess of this equity, and M. -is insolvent; therefore Gorman is equitably entitled to relief. The law gives a -clear method of enforcing justice among these parties. Gorman has followed this method and is entitled to have the same approved and his rights enforced.

The order appealed from is reversed.

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Dissenting Opinion

McCO-Y, J.

(-dissenting.) This action was -commenced on the'25th day of March, 1914, to determine adverse title and equitable interests 'in and to the southeast quarter of section 6, township 114, range 52, in Hamlin- -county; the plaintiff claiming to be the owner thereof under and by virtue of a mortgage foreclosure sale. The defendant Gorman, interposed a counterclaim claiming to ibe entitled to said land as owner thereof by virtue of attachment levy and judgment and redemption thereunder from the mortgage sale under which plaintiff -claims. Plaintiff by reply and as. a defense to this counterclaim alleged matter tending to show that defendant Gorman is estopped and legally precluded from claiming any interest in said lama under -his attachment levy and judgment. Defendant Gorman interposed a general demurrer to this portion of the reply on the ground that the same did not constitute a -defense to' said ■counterclaim. From, an order overruling s-uch demurrer, defendant Gorman appeals.

The facts disclosed by said pleadings material to a disposition of the question 'here presented, and which, for convenience, we classify under three divisions, are substantial these: (1) On the 2d day of July, 19.09, one W. S. Madden, who was then'the fee-simple owner of said southeast quarter of section 6, as a mor-t-gagor, executed and delivered to’ one Gould a real estate mortgage upon said land to secure the payment of $3,000 and interest. Default having been made in the payment of said sums so secured by said mortgage the said mortgagee foreclosed the same, ¡by advertisement, arndi on the 1st day of February, 1913, at foreclosure sale the .said land was sold to one Skinner, and a certificate of sale issued to said purchaser. On March 27, 1913, Skinner assigned said certificate to plaintiff, which assignment of certificate was filed for record on January 21, 1914. That after the expiration of one year from, the date of said foreclosure sale the plaintiff demanded of the sheriff of said county a sheriff’s deed on such foreclosure, which was refused by said sheriff on ■the ground that on the 24th day of January, 1914, the defendant Gorman bad redeemed from, such foreclosure sale by the payment to said sheriff -all such sums as were required' by law to1 make such redemption. (2) On the 7th day of September, 1909, the said Madden, s.till being the 'fee-simple owner of said! land, entered into a contract with one Dentil, whereby Madden agreed to sell. and convey, and Denth agreed to .purchase, said land for the consideration of $8,320, the said Lenth agreeing to1 assume the payrr lit of the Gould mortgage, to pay $2,070 on delivery of the contract, and $3,250 on the 1st day of March, 19.10. On the 9th day of September, 1909, Madden executed' a warranty deed to said Lenth, as grantee, and delivered the same to. the Monona State bank of Monona, Iowa, as a depository appointed by said Lenth to> receive 'the same. Lenth .paid the said $2,070, and took possession of the land, 'but made default in the payment due March 1, 1910, 'anid thereafter in July, 1910, served notice of rescission of said contract. Also in July, 1910, Lenth, as -plaintiff, commenced an 'action against Madden, as defendant, to rescind and cancel said contract on the ground of alleged fraudulent representations. Madden answered in said action, denied the alleged fraudulent rep'resentations, interposed a counterclaim for specific performance of the contract, tendering to Lenth the deed theretofore delivered to the Monona State Bank, and demanded recovery from Lenth of the balance due on said contract as purchase money and that his lien for ¡such, purchase monej'- he foreclosed and said land sold to satisfy the same. Notice of the pendency of this action was filed : the time of the commencement thereof. Thereafter, in February, 1914, on the trial oí said action the court found, and' on March 5, 1914, •'adjudged that Lenth, as such, plaintiff, take nothing by his suit, and that Madden, as such defendant, have and recover from, Lenth the sum of $4,456.05 for the amount remaining unpaid on said purchase price; that said Lenth is the owner of said land and has been such owner since September 7, 1909, subject to the lien of said Gouldl mortgage, and also1 subject to the lien of Madden for the unpaid purchase money. (3) On January 25, 1912, the 'defendant in this case, Gorman, as plaintiff ini the case of Gorman v. Madden et al., another action which had been then pending for some years, attached and levied on the land in question as: the property of the defendant Madden in that action, and on the 7th day of November, 1912, judgment in favor of plaintiff in the said action of Gorman v. Madden et al. was docketed in Hamlin county against Madden. On the 24th day of January, 1914, Gorman,, as -the owner of said judgment against Madden, claiming the right as a judgment creditor of Madden with a lien on said land, sought to redeem from, the foreclosure sale made under the Gould mortgage.

The ahatter contained in plaintiff’s reply to which the demurrer was1 interposed) alleged the facts in relation to, the contract of sale of said' land by Madden to, Lenth and .the suit of Lenth /. Madden and the judgment rendered therein. It is the contention of respondent that Gorman, neither under the attachment levy nor under the judgment, as plaintiff in the suit of Gorman v. Madden et al., obtained and acquired a lien upon or against the land in question, and by reason thereof had no legal right to malee redemption under the Gould) foreclosure; that notice of the pendency of the suit of Lenth, v. Madden having been filed and being of record- long’ prior to, such attachment levy and judgment in the Gorman v. Madden suit, and the judgment in 'the Lenth suit having adjudicated that Lenth became the owner of said real estate in September, 1909, and that Madden had no- interest in said land in 1912 that was subject to levy under attachment or subject to the lien of the judgment for plaintiff in the Gorman v. Madden -case, the defendant Gorman in this -case became concluded and bound by the judgment in the Lenth case. I am of the -opinion 'that the 'demurrer to plaintiff’s- reply was ¡properly overruled. It is a well-established' rule in this state that an unrecorded warranty deed will take precedence over a subsequent attachment or judgment lien upon the property conveyed -by such unrecorded deed; that such, attachment creditor is not considered as an innocent purchaser or incumbrancer under the recordation statutes, of this state. Such attachment and judgment lien could only attach and become operative on whatever title and interest the attachment or judgment lien debtor had, if any, in the land at the date of the-attachment levy and docketing of the judgment. Roblin v. Palmer 9 S. D. 36, 67 N. W. 949; Bateman v. Backus, 4 Dak. 433, 34 N. W. 66, 68; Kohn v. Lapham, 13 S. D. 78, 82 N. W. 408;. Murphy v. Plankinton Bank, 13 S. D. 501, 83 N. W. 575; Haynie v. Bennett, 22 S. D. 65, 115 N. W. 515; Bliss v. Tidrick, 25 S. D. 533, 127 N. W. 852, 32 L. R. A. (N. S.) 854, Ann. Cas.. 1912C, 671. The -effect of the- judgment -in the Dentil case was. that Madden had- 1 interest or title in the land at the time of the-attachment levy and docketing- of the judgment in the Gorman v. Madden suit. The only interest Madden had in- the land, in question -in 1912 was his chose- in action, namely, his debt against. Denth for the balance of the purchase money' and a right to- a purchase money lien on the land. This! -chose in action was not levied upon under the Gorman attachment, and the Gorman judgment -against Madden did not become a lien u-pon this chose-in action in Madden’s favor growing out of the Denth contract.

The crucial question in this case is whether Madden had parted with- -bis title before the 25th day of January, 1912, at the time the Gorman attachment was levied on the land. It seems, to me that the -majority .opinion wholly loses sight of the-fundamental foundation principle that is involved in the .performance of such transactions and1 contracts relating to the sale-of property. It will be observed! that the contract 'between Denth and Madden was not a unilateral option -contract containing-specific precedent conditions, and time being of the essence thereof, and! where title -could not pass, until the performance of such precedent conditions, but it was a plain unconditional sale-for so- much money agreed to be paid in a certain maimer on a. certain date. Much that was -said in State v. Weide, 29 S. D. 109, 135 N. W. 696, directly applies to this case as- to the effect of such contracts. The kind of contract here involved is considered’’ in-1 Warvelle on Vendors, § 174, and 6 Bom. Eq. Jr. p. 1273. The fundamental principle to which I refer is that “equity regards that as done which ought to have been done.” All throughout the general law of sales of both real and personal property, where the question of acceptance and delivery is ‘involved, where a purchaser-has agreed to accept a thing, and the seller performs on his part, and places the buyer in a position where he ought, under his contract, to accept and receive delivery, but wrongfully does not, equity says that such buyer will be regarded as having accepted as of the time when he should, have done so. It is quite evident that the learned trial court applied this principle of equity law in -the Tenth v. Madden case. Facts were alleged in the pleadings of that case fully warranting the judgment rendered. Gorman had notice of the pendency of that action and of all 'the issuable facts appearing in such pleadings, and all of which occurred long prior to January 25, 1912. Madden had, long prior to January, 1912, placed Lemth in a position where - he ought to have accepted the 'delivery of the deed; the said deed being then in the possession of a depositary and agent selected by Lenth. Madden had performed and done all within his power, all that was required, of him under the contract, and all that remained under ithe contract was; for Tenth to pay' the balance of the purchase money. Madden had executed a deed and placed it where Tenth should have accepted it. Under these circumstances, equity says Tenth will be regarded as having accepted delivery of the deed when 'he ought to- have done so. That placed the title fully and completely in Tenth as of the date when Tenth should have accepted. From' thence afterwards Tenth was indebted to Madden for the .purchase price remaining unpaid with a purchase money Hen on the land of Tenth. From thence thereafter Madden had no title. At that instant Madden, having fully performed on his part, was entitled to full and complete specific performance from Tenth. Madden by the full ami complete performance of the contract of sale on hisi part, and by the tendor of his deed which, ought to have been accepted by Tenth, fully invested Tenth with title. If Madden had no title in 1912, there was nothing for the attachment levy on the land to take effect upon. The matter of passing title under the contract of sale was a matter purely and solely between Tenth and Madden, in which Gorman was not concerned or bad no interest. If title passed between the said parties to the sale contract in 1910, Gorman became bound thereby. The trial court by its decree did no.t create any new situation of affairs, but only declared the effect of what had taken place in 1910, prior to the beginning of that action. The judgment ¡in Lentil v. Madden was based upon the legal and equitable status of the contract and transaction at the commencement of that action. If decreed what had taken place some two years prior to the attachment, and of which Gorman had notice. The pleadings' in that case tol-d him what the facts were; he was presumed to know the result applicable to such facts.

Again, Madden could not foreclose a purchase-money lien against his own land, and against land in which he himself held title, but it was because title was in Lentil that the court could decree a foreclosure of the purchase-money lien. This, also, appeared from the pleadings in the Lenth case. Gorman should have levied upon the chose in action belonging- to Madden, instead of making a levy on the land itself.

The judgment appealed from should be affirmed.

SMITH, J., concurs.