189 Ky. 698 | Ky. Ct. App. | 1920
Affirming on both the appeal and the cross appeal.
On February 21, 1913, Delilah and Cynthia Napier in consideration of $1,070.60, $300.00 of which was paid at the'time, executed, acknowledged and delivered their agreement to convey to E. L. Thomas all the mineral in and to a one-fourth undivided interest in a tract of land in Perry county containing 428.24 acres. T. E. Moore, Jr., was the agent of Thomas and represented him in procuring the contract which was recorded in the Perry county clerk’s office on the day it was executed. Under the terms of the contract (to which we shall hereafter refer as the Napier contract) the deed to the minerals agreed to be conveyed was to be executed and the bal-" anee of the purchase money paid as soon as the Napiers furnished an accurate survey of the property and a complete abstract of their title showing it to be perfect. - Two of the undivided fourth interest in and to the minerals under the entire tract had been purchased a short while before by the appellant and defendant below, Haly Coal Company, through its agent, J. B. Hoge, and he had been negotiating and had practically agreed upon terms for the purchase of the fourth interest of Delilah and Cynthia Napier which they agreed to-convey in their contract with Thomas, but Hoge had not procured for his principal an enforcible contract from the Napiers. Shortly after the Napier contract was recorded, Hoge informed Moore, the two' being friends, that his. principal had instructed him to procure a deed from the Napiers, which he had neglected, and that he would be not only criticized but perhaps lose his position on account of such failure unless Thomas would agree to transfer to the Haly Coal Company the Napier contract. To favor Hoge, Moore, as the agent of Thomas, agreed to do so in consideration of the payment of .$310.00 to Thomas (being the amount paid the Napiers and expenses in procuring their contract) provided Thomas did not object. On April 28 following the date of the execution of the contract Hoge, Moore and Thomas met in Lexington and the latter orally but conditionally as the court found agreed to transfer to the Haly Coal 'Company, the Napier contract, pursuant to the terms recommended by Moore, and Hoge drew a draft payable at the Paintsville National Bank, Paintsville, Kentucky, the drawee being George F. Copeland, who was
This suit was filed on the 10th day of April, 1917, by Irma Trent Thomas, widow and sole devisee of R. L. Thomas, against the two corporations, Haly Coal Company and Kentucky River Coal Corporation, seeking a specific performance of the Napier contract upon the ground that it vested in Thomas the equitable and beneficial title to the mineral involved, leaving the Napiers holding only the legal title as trustees for him, and that the two defendant corporations took the legal title from the Napiers encumbered with the trust and burdened with the duty to convey it to the equitable title holder on performance by him of the obligations which he assumed in the Napier contract. A demurrer to the petition was overruled and defendants filed their joint answer in which they relied on the- transaction in which the $310.00 draft was issued and the subsequent obtention of the deed from the Napiers pursuant thereto, and pleaded other facts which they claim constitute laches on the part of plaintiff and her testator and which estopped plaintiff from maintaining the action. They' denied that Thomas had any equity in the minerals involved or that either of them took their deeds subject to any such alleged equity. Afterwards an amendment was filed in which the assignment of the Baker contract to Hull and by him to defendant, Kentucky River Coal Corporation, was pleaded. The reply filed to the amended answer admitted the execution of the Baker contract and that it had by mesne conveyances been duly assigned and transferred to the Kentucky River Coal Corporation; but it was averred in avoidance thereof that the latter company had failed, declined and refused to perform it although frequently requested and demanded to do so, and that such failure and refusal on its part entitled plaintiff and her testator to treat that contract as rescinded, which had been done, and which restored the parties to their original status as if that contract had never been executed. Appropriate pleadings made the issues and upon final submission the court in its judgment denied the plaintiff the relief of specific performance but rendered in her favor a judgment against defendants for $2,462.38, being the price agreed to be
, We have concluded to first dispose of the questions raised by the cross appeal. It is. insisted by appellees that there was a defect of parties defendant and for that reason the petition should have been dismissed, but this question was not raised either by special demurrer or other appropriate pleading or motion, and for that reason alone we would be fully justified in considering it no further, but, waiving the question of practice, we are unable to agree with defendants ’ counsel upon the merits of their contention for we find the law to be well settled that a purchaser from a vendor who has previously sold by executory contract, takes and holds his title as a constructive trustee for the vendee in the prior executory contract, provided that such purchaser, though for a valuable consideration, had notice of such prior equity, and as such constructive trustee he assumes all the obligations of his vendor and may be compelled by an appropriate proceeding to perform the latter’s original contract. This doctrine is thus stated in the text of 36 Cyc., page 761: “Where the vendor or lessor, after the contract, conveys the land to a purchaser who takes with notice of the contract, actual or constructive, or who does not part with a valuable consideration for his purchase, such grantee takes and holds the laud as a constructive trustee for the vendee or lessee, and may be compelled at his suit to perform the original contract by conveying or leasing the land to the vendee or lessee. The same rule may apply to other contracts than those for the sale or lease of land. Of course, in order that the rule may apply, the contract must be of such a character that the court can specifically enforce it.” The note to the text cites cases from the highest courts in twenty-seven states of the union, some cases, in the inferior federal courts and a number of English cases. Mr, Pomeroy, in his valuable work on equity jurisprudence, 3rd edition, vol. 2, section 732, supporting the text in Cyc., says: “One who acquires the subsequent estate or interest with notice of the earlier equity in
Defendants in support of their cross appeal also insist that under the principles announced in the case of Wells v. Derrickson, 184 Ky. 384, plaintiff is estopped to rely upon the failure of her testator to transfer the Napier contract in writing- to the Haly Coal Company. It may be true, under the doctrine in that case, that if Thomas had directed Hoge to procure the deed from the Napiers and pursuant thereto it was so procured an estoppel would be created; but, whether so or not,- the court found as a fact (which finding is supported by sufficient evidence) that no such direction was given by Thomas to Hoge. On the contrary, the judgment necessarily found the fact to be that Thomas only agreed or consented to transfer the Napier contract on condition that the draft for $310.00 was paid. It is also insisted that the doctrine of laches should operate to estop plaintiff from maintaining her suit, but we find none of the elements of that doctrine in this case. No intervening equity has arisen. The original parties are the same except the defendant, Kentucky River Coal Corporation, who purchased with full knowledge of all the facts, and we do not find that defendants’ contention, that it expended a large amount of money in reliance on the transfer of the Napier contract, to be sustained by the evidence. It results therefore that there exists no ground for disturbing the judgment on the cross appeal.
This leaves for consideration the points urged by appellants’ counsel as grounds for reversing the judgment on the original appeal. They are (1) that plain
From what has been said it is manifest that ground (1) should be sustained but for the existence of the Baker contract. Counsel seeks, however, to relieve his client of the obligations of that contract because defendants on request declined to perform it, thereby giving her the right, as he insists, to abandon it, and that she did so when defendants refused to perform it upon demand made before filing this suit. The principle of law contended for is undoubtedly a correct one as is shown by the following: 6 B. C. L. pages 925-927; 13 C. J. 609-621, 24 A. and E. Ency. Law, 2nd edition, 643 and 671; Black on Bescission and Cancellation, vol. 1, sections 196 and 202; Warvelle on Vendors, vol. 2, section 844; Lakeshore and Michigan Southern Ry. Co. v. Richards, 30 L. R. A. 33, and annotations, and Newton v. Bayless Fruit Co., 155 Ky. 440. An examination of these authorities will show that there are many exceptions to the general doctrine which are- too lengthy and too numerous to incorporate in this opinion. They are, however, based upon the principle that if it would be inequitable and work a manifest injustice to uphold the rescission it will not be done. The' refusal to perform must be “unjustifiable,” say the authorities, to have such effect. In this case defendants relied on two defenses to defeat specific performance of the Napier contract; one was, (a) the rights which they obtained under the transaction with reference to transferring that contract had with B. L. Thomas at the time of the delivery of the $310.00 draft, and the other was, (b) that one of them had become the owner of the Baker contract and, in effect, they insisted that if they should be unsuccessful in their defense (a), then in no event was plaintiff entitled to specific performance of the Napier contract after the execution of the Baker contract, since the only relief which the court could grant her was a judgment for the amount due under the latter contract. Defendants appear to have bona fiáe- relied on defense (a) and likewise to have believed in good faith that the defense therein urged was a substantial one, and this reliance is not without justifiable color to support it. If defend
However, defendants were not the owners by assignment or otherwise of the Baker contract at the time of the filing of this suit. None of the verbal demands for performance testified to in the record, made before Hull assigned that contract can avail plaintiffs in this case, for the manifest reason that no one can be required to perform a contract to which he is not a party by assignment or otherwise. And if a demand could be legally made after the filing of the suit and before judgment-defendants then had, as we have shown, the right to decline without incurring the risk of losing all the benefits of that contract.
The next point argued by plaintiffs is that the court erred, in rendering a judgment in her favor when she did not- ask it. Her pleadings pray “for all proper and equitable relief, ’ ’ and this being a case in equity and the
Wherefore the judgment on both the original and cross appeal is affirmed.