Phillis v. Gross

PGLUEY, J.

This is an appeal by the plaintiff from a decree for defendants and an order denying plaintiff’s motion for a new trial. The action was brought by plaintiff. for the purpose of having quieted in her the title to a quarter section of land in Potter county. On and for some time prior to the 17th day of March, 1898, one C. E. Chamblin, of Mason county, Ill., was the owner of the land, as patentee from the United States government. On said date he executed a “bond for deed” to1 one Stoughton P. Edgerton. This instrument was made out on a printed form, with blanks to be filled in to make it conform to the conditions agreed upon by the parties. The lhaterial portions of said agreement, with the written parts in italics, are as follows:

“* * * The condition of the above obligation is such, that, whereas, the above bounden C. B. Chamblin has this day sold to the said Stoughton P. Bdgerton, his heirs and assigns, for the sum of $582.50, all of the following described lot, piece or parcel of land, to-wit: S. E. ¼ of Sec. 13, T. 117, R. 76, situated in Potter county and state of South Dakota, which sum of $582.50 is to be paid in the manner following: Ten. notes, dated July 1, i8p8, payable as follows, to-wit,” one on the 1st day of January, 1899, and one every six months thereafter until the 1st day of July, 1903, “with interest at the rate of 6'C per- annum from maturity annually on the whole sum remaining from time to time unpaid, and if the interest be not paid annually to become as principal and bear the same rate of interest.

“Upon the payment of the said sums being made at the time and in the manner aforesaid and of all taxes, assessments or impositions that may be legally levied or imposed upon said land for and after the year A. 1). 1897, the said C. B. Chamblin, his heirs, executors and assigns, covenants and agrees lo and with the said Stoughton• P. Bdgerton, his heirs, executors, administrators and assigns to execute a good and sufficient deed. of conveyance, in ice simple free from all incumbrances, with, full covenants and warranty, for the above described premises.

“Now, if the said C. B. Chamblin shall well and truly keep, observe and perform his covenants and agreements herein contained on his part to be kept and performed, then this obligation to be void; otherwise to remain in fhll force and virtue. It is expressly understood and agreed by and between the parties hereto, *445 that time is of the essence of this contract, and, in the event of the non-payment of said sum of money ,or any part thereof, or the interest thereon, at the time or times herein named for its payment, that then the said C. E. thamblin, his heirs, executors, and administrators, and assigns shall be absolutely discharged at law and in equity from any and all liability to make and execute such deed.”

This instrument was not acknowledged by the said Chamblin, but it was filed for record on the 6th day of May, 1902, and was recorded in Book of Miscellaneous Instruments in that office.

The said Edgerton, at the time of the execution of the said instrument and until his death, which took place on the 5th day of June, A. D. 1908, resided on a quarter section of land, just half a mile north of the one in controversy. He farmed some, but was principally engaged in stock raising — having a large flock of sheep of his own — and also acted as an agistor for the purpose of pasturing sheep for others. The evidence tends to show that he went into possession of the land in controversy about the time of the execution of the above instrument, and, as claimed by the plaintiff, remained in the continuous occupation thereof until the time of his death. About 15 acres of ground in the northeast corner of the land in controversy -had been broken and farmed prior to the time of the -purchase, and this he continued — either by himself or -his tenant — to farm from year to year, as long as he lived. The remaining portion -of the quarter section he used as a pasture for his flecks. He also owned and, from time to time, leased other land in the immediate vicinity, which he used in the same -manner and for the same purpose. Some time prior to his death, he executed a last will and testament, in which he devised the lan-d in controversy to the plaintiff. This will was probated, and on the 12th day of July, 1909, a decree of distribution entered by the county court of Potter county, decreeing plaintiff to be the owner of the premises, was filed for record, in the office of the register of deeds of that county.

This action was commenced by the issuance of the summons and the filing of the complaint in the office of the clerk of courts for Potter county, on the 7th day of May, 1910; and on that day plaintiff filed for record, in the office -of the register of deeds of said Potter county, a proper notice of ¡is pendens. On the *446 7th day of April, 1902, the said Chamblin by a warranty deed undertook to convey the said premises to one John Campbell; and thereafter, by sundry conveyances, the title, if any, so conveyed to Campbell passed to the defendant, Robert A. Gross, on the nth day of September, 1905. On the nth day of December, 1905, Gross conveyed such title as he had to one Sell, who on October 17, 1907, reconveyed to said Gross. On the 8th of November, 1907, said Gross conveyed his title to one Zessin, who on the 7th of March, 1910, reconveyed to Gross: and he (Gross) by deed dated April 27, 1910, conveyed his. title to Oscar D. Bost, who filed his deed for record on the 17th day of May, 1910. On the 13th day of May, 1910, Bost executed and delivered to Gross a mortgage as security for the payment of $5,000, which mortgage was filed for record on the 17th day of May, 1910 — ten days after the filing of plaintiff’s notice of Hs pendens. On the 5th day of July, 1910, the court, upon a proper petition, entered an order permitting Bost to file a complaint in intervention, and making him a part)'- to the action as intervener.

Plaintiff, in her complaint, alleged that she was the owner in fee of the land in controversy, and asked for a decree, decreeing her to be the owner thereof in fee, that title thereto be quieted in her, and that defendant be decreed to have neither right, title, nor interest in or to said premises. Defendant Gross answered plaintiff’s complaint, denying plaintiff’s interest in the land, and asked that she be decreed to have no interest therein, and that said mortgage to him be decreed to be superior to plaintiff’s claim. Intervener, Bost, in his complaint in intervention, alleged ownership in fee in himself of the disputed premises; that plaintiff’s claim of title thereto was subsequent and inferior to his, but that the said claim constituted a cloud on his title, and asked that title -to' the land be quieted in him, and that plaintiff be enjoined from asserting any further claim thereto.

As to whether or not Chamblin was living at the time of the trial is not disclosed by the record; neither is there any evidence anywhere in the record showing whether or not the notes provided for in the contract were ever executed or delivered by the said 'Edgerton. Neither is there any evidence in the record showing whether or not any of the said notes, or any sum of money evidenced thereby, was ever paid to Chamblin by Edgerton, and *447 the finding of fact by the court that no part of the purchase price, nor any taxes, had ever been paid by Edgerton is without any support whatever in the evidence.

At the trial, the court, among others, made the following findings of fact:

“'VII. That no knowledge upon the part of said C. E. Cham-blin and his grantees, or any of them, of the claim of said Stough-ton P. Edgerton, if any, to said premises was shown; that it was not shown that Stoughton P. Edgerton during his lifetime, or the plaintiff thereafter, or any one in their behalf, ever paid any taxes assessed against said premises;

“VIII. That neither the said Stoughton P. Edgerton, during his lifetime, nor any one-in his behalf, nor the said plaintiff since the decease of said Edgerton, paid any sums of money whatsoever under or in pursuance of the provisions of said bond for deed, nor otherwise in any w.ay complied with the conditions thereof, and there was no showing that such payments, or any of them, were ever made, and that, by the failure of the said Edgerton to make the first .payment -above referred to at the time provided in said contract, said contract became void and of no effect;-

“IX. That said Stoughton P. Edgerton during some of the }ears following the execution of said bond for deed grazed his sheep upon said premises, and during some of the years prior to his death cultivated about 15 acres thereof; but there was no showing that the said C. E. Chamblin and his grantees, or any of them, ever had knowledge of the pasturing of said sheep or the cultivation of said 15 acres, and that the use of said premises by said Stoughton P. Edgerton during his lifetime was in no manner known to or acquiesced in by the said Chamblin, or any of his grantees;

“X. That upon the nth day of September, 1905, the date -of the said deed executed by Ezra W. Patterson to said Robert A. Gross, and during the whole of the year 1905, said Stoughton P. Edgerton did not occupy the said premises and did not cut any hay thereon nor cultivate any portion of said premises, or otherwise, and that said Robert A. Gross, upon the said nth day of September, 1905, and until the year 1907, had no actual knowledge of the existence of said bond for deed, and that he purchased the said premises at said time for value;

*448 “XI. That neither the said Stoughton P. Edgerton during his lifetime nor the said plaintiff at any time made any offer or tender to comply with or perform an}' of the conditions of said bond for deed.”

[1] Whether the plaintiff has any rights in the premises depends largely upon whether or not the defendants were charged with notice of Edgerton's contract at the time they purchased their interests. It will be remembered that Edgerton’s bond for deed was not acknowledged by Chamblin, and therefore was not entitled to record; and the record thereof was not constructive notice to subsequent purchasers. It was a valid contract, however, as between the parties themselves, and binding upon subsequent purchasers who had knowledge of it at the time they acquired their interests: Civ. Code, § 990. Any one who saw it, or who saw the record thereof, would be charged with knowledge of Edgerton’s rights. While it is not at all likely that the various parties who claimed to have purchased this property for value would have done so without examining the title as it appeared of record, and would necessarily have seen this contract, there is no evidence that any of them did see it or have actual knowledge of its contents; and we .cannot presume that they did.

[2, 3] It is claimed by plaintiff, however, that Edgerton went into possession of the property as his own under the contract, and that he remained in continuous possession thereof and used the same as his own during the remainder of his lifetime, and that such use and occupation was sufficient to charge the defendants with knowledge of all the rights he actually had. On the other hand, it is claimed by the defendants — and the court so found — ■ that Edgerton was not occupying or in possession of the land when Gross acquired his title, on the nth day of September, 1905; that Gross was a purchaser for value, without notice, and therefore his title and that of his grantees was freed from the rights of Edgerton. If this finding by the trial court is correct or supported by the evidence, it disposes of the case. It is contended by the appellant, however, that this finding is not only without support in the evidence, but that it is contrary to all of the evidence. Of course, this being a finding of fact by the trial court, it will not be disturbed unless it is against the preponderance of the evidence, or, if the evidence on .this point is conflicting, then the finding of *449 the trial court is conclusive upon this court (Durand v. Preston, 26 S. D. 222, 128 N. W. 129 ) ; but, after a careful examination of the evidence, we are of the opinion that this finding is without any support whatever in the .evidence.

[4] It is not contended by respondents that the use and occupation of the land by Edgerton was not sufficient to charge Chamblin’s grantees, who acquired their interests prior to the 11th day of September, 1905, with knowledge of his (Edgerton’s) rights. It was on this date that the defendant Gross first became connected with the title. If Edgerton’s possession at that time was such as to charge Gross with knowledge of his rights on that date, it is immaterial whether his grantees, with the exception of Bost, were bona fide purchasers or not. If Gross conveyed -the title to a bona-fide purchaser without notice, then such purchaser took the property freed from the rights of Edgerton. But, when such .purchaser reconveyed to Gross, Gross again took-the title subject to the rights of Edgerton. 2 Pom. Eq. § 754, where the rule is stated as follows: “If the title to land, having passed through successive grantees, and subject, in the hands of each, to prior outstanding equities, comes to a purchaser for value and without notice, it is at once freed from-these equities; he obtains a valid title, and, with a single exception, the full power of disposition. This exception is that such a title cannot be conveyed, free from the prior equities, back to a former owner who- was charged with notice.” Therefore, if Gross was charged with notice of Edgerton’s rights when he first became connected with the title to the premises, the title, when reconvej^ed to him, would still be ■subject to the rights of Edgerton, whether 'his grantees had been bona fide purchasers or not; and Bost does not claim to be in any other, or better, position than that occupied by Gross.

It is conceded' that Edgerton went into possession of the premises at about the time of the execution of the contract. The land, with the exception of a 15-acre tract in the northeast corner, which had been broken and - cultivated before that time, was unfenced and unbroken. In that' condition it could be used only for pasturage. Evidence furnished by the testimony of a neighbor, who had lived near by during all of the time since the execution of the contract, was to the effect that Edgerton ploughed and *450 planted crops on the cultivated portion of this land every year. That some years, when the crop did not promise well, he had turned his sheep upon it and used it for pasture — the same as the other portions of the land. It was not claimed that he lived upon it, or that he was upon it himself every day, or that he kept his flocks constantly upon this particular quarter section of land; but it was clearly shown that he used it every year in the manner and for the purposes to which it was best suited, and used it exactly as he did other land that he owned or occupied under lease in the same vicinitjn He exercised absolute dominion over it, and his occupancy was open and visible to all the world. For the season of 1908 'he leased the cultivated portion of the land to a neighbor, but retained and used the remaining portion himself. When it came to the most solemn transaction of a man’s life, viz., the execution of his last will and testament, he treated this piece of property as though he were the owner thereof, in fee simple, and disposed of it by devise, the same as he did his other property.

To show that Edgerton’s occupancy of the land had not been continuous, the respondents undertook to show, by the testimony of the defendant Gross, that he was upon the premises on the nth da5^ of September, 1905 — the day upon which he first acquired his interest in the ground — and that upon that occasion he did not see Edgerton, or any one else, thereon; that there had been no hay cut upon the place that year; neither were there any sheep, or other stock, pasturing there at that time; and that the ploughed portion of the land had not been cultivated for that 3'ear. HHs testimony, however, covered only the particular time that he was upon the ground. He does not appear to have been there more than an hour, and he could have done all that he says he did while upon the ground in half that length of time. Although Edgerton’s residence was within half a mile of the premises, and he claimed to have been acquainted with Edgerton since he was a child, he did not go there, or elsewhere, to make inquiries as to whether the land was occupied or not; nor -did he undertake to show that the land was vacant, except during the time he was actually upon it. He claimed to have been upon the premises on another occasion — as early as the month of June of that year. He did not say, however, that the premises were unoccupied at that time. For aught that appears from his testi- *451 money, the land may have been used for pasturage every day of the }ear 1905. Stock that was using that land for pasturage at that time may have been temporarily absent, or it may have been taken to water and returned within a few hours. A neighbor, who lived near to and passed by the- premises frequently, and who bad n.¡ interest whatever in the result of the action, swore positively that Edgerton did use the land in question during the season of n;o5; that he was sure that Edgerton put in a crop on the cultivated portion of the land that year, although he. thought that was one of the years when the crop did net give -promise of success and rvas used by Edgerton for pasturage.

[5] It was not disputed that Edgerton was still in possession of and using the land in the ordinary manner during the seasons of 1906 and 1907, and that for the season of 1908 he leased the cultivated portion of the land to another party. These were all acts of ownership, and, while they are not, in themselves, evidence of title, they were sufficient to give notice to- the world of whatever rights in the premises he actually possessed, and to put prospective purchasers upon inquiry as to the extent of what his rights actually were. It was not necessary that the said Chamblin, or his grantees, should have had actual knowledge of Edgertdn’s possession and occupation of the ground. His possession was sufficient to charge them with notice thereof; and, if they purchased the property without -ascertaining the extent of Edgerton’s rights, they did so at their own risk: Izard et al. v. Kimmel et al., 26 Neb. 51 , 41 N. W. 1068 : Houzik v. Delegdise, 65 Wis. 494 , 27 N. W. 171 , 56 Am. Rep. 634 ; Meade v. Gilfoyle, 64 Wis. 18 , 24 N. W. 413 ; Watters et al. v. Connelly et al., 59 Iowa, 217 , 13 N. W. 82 ; Allen v. Cadwell, 55 Mich. 8 , 20 N. W. 692 ; Corey v. Smalley et al., 106 Mich. 257 , 64 N. W. 13 , 58 Am. St. Rep. 474 ; Miner v. Wilson, 107 Mich. 57 , 64 N. W. 874 ; Moyer v. Hinman, 13 N. Y. 180 ; School Dist. No. 3 et al. v. Macloon et al., 4 Wis. 79 : Biemann v. White, 23 S. C. 490; Nolan v. Grant, 51 Iowa, 519 , 1 N. W. 709 ; Betts v. Letcher, 1 S. D. 182, 46 N. W. 193 .

[6] Many of the above cases hold that far less acts of ownership than were shown by Edgerton were sufficient to constitute adverse possession. Where the acts of a vendee are such that reasonable inquiry would reveal his possession, a subsequent purchaser is charged with notice of the vendee’s rights, though his *452 title is not of record. Banner et al. v. Ward et al. (C. C.) 21 Fed. 820 .

Appellant assigned a number of errors based upon the admission and exclusion of evidence on the trial. These have been examined; but, in our view of the case, they are not material, and therefore it will not be necessary to take diem up and consider them in detail.

, It is contended by the appellant that the evidence is insufficient to support the finding's of fact and conclusions of law made by the court. It will be noticed that many of these so-called findings of fact are not findings of fact at all, but are merely negative findings to the effect that there is no evidence to prove certain facts, and are therefore of no materiality to a decision of the case. The findings in regard to the possession and occupation of the land are disposed of by what has already been said.

[7,8] This brings us to • the conclusions of law. The court, among other conclusions, made the following: “That Stoughton P. Edgerton, during his lifetime, abandoned said contract for deed, and the assertion of claim of title to said premises under the same.” There is no warrant in the record for this conclusion. In the first place, abandonment is a question of fact, and not of law: 1 Cyc. 8, and cases cited. There is no evidence whatever to show that Edgerton ever intended to abandon his interest in the land in controversy, nor to relinquish his possession thereof. The mere fact of non user for a period of time, if such had been shown, would not be sufficient to warrant a finding that abandonment had taken place. “Abandonment includes both the intention to abandon and the external act by which the’ intention is carried into effect1 Cyc. 4. Neither was it shown that Edgerton ever did airy act or made any statement or admission that would estop him from claiming title to the ground under his bond for deed.

[9] The court also held, as a matter of law, that: “Said bond for deed was absolutely extinguished by the failure of said Edgerton to make the payments therein provided for.” This conclusion is evidently based upon the theory of the court that time was of the essence of the contract, and the failure on behalf of Edgerton' to perform any of the conditions thereof on the day provided therefor would work a forfeiture of all his rights under the contract. This conclusion is clearly without support in the *453 evidence. In the first place, there is no evidence to show that all of the notes were not paid when due; and, in the second place, a forfeiture would not have resulted in case the payments were not made when due. It is true that the contract contained the declaration that: “It is expressly understood and agreed by and between the parties 'hereto that time is of the essence of the contract,” and that a failure on the part of Edgerton to comply with any of the covenants contained therein at the time agreed upon by the parties would work a forfeiture of all of his rights under the contract. This stipulation, however, is a part of the printed form, and was superseded by the provisions, interlined by the parties themselves, that all overdue sums of money should draw interest at the rate of 6 per cent, after maturity., “and if the interest be not paid annually, to become as principal and bear the same rate of interest.” It must be borne in mind that the contract provided for the execution, by Edgerton, of ten promissory notes, payable at future dates, and interest was to accrue on the notes only after maturity. If default had been made and if the interest was not paid annually, it was to be added to the principal and draw interest at the same rate as the original — plainly showing that it was the intent of the parties that, in case Edgerton made default in the payment of either of the notes when the same fell due, the penalty for such default should be the payment of interest on the overdue sums, and not the forfeiture of his rights under the contract.

[10] It has recently been held by this court that whether or not time is to be considered as of the essence of a contract depends upon the intention of the parties .thereto and the object to be attained by the contract, rather than upon the express declaration of the parties contained therein: Western Townsite Co. v. Lamro Townsite Co. et al., 139 N. W. 777 . This contract will bear no other construction.

[ 1 1 ] The court held, as a matter of law, that the plaintiff had no interest whatever in the disputed premises; that the defendant Bost rvas the owner in fee thereof, subject to a mortgage for $5,000 in favor of the defendant Robert A. Gross. Whether or not this conclusion is correct depends upon the interest acquired by Edgerton in the premises by the execution and delivery of the contract in question, the delivery to Edgerton of the possession *454 of the premises, and the relation created thereby between Cham-blin and Edgerton. It must -be borne in mind that the contract contains no optional features; neither is it a mere contract' to sell real property at some future date. By the recitals contained in the contract, it appears that the sale of the land had already taken place. Upon the execution and delivery of the contract, Edgerton became the equitable owner. of the property, vested with all the rights and privileges of absolute ownership. It is true that Chamblin retained the legal title, but he retained only the naked legal title, and this only as security for the payment of the notes given for the purchase price of the land, but without any of the rights of ownership. The relation that existed between Chamblin and Edgerton became that of creditor and debtor: “That of equitable mortgagor and mortgagee, the vendor holding the legal title as security for the unpaid money, which security it has been 'held, is essentially a mortgage interest. The vendee has an equity of redemption, and the vendor a correlative rigdit of foreclosure upon default in the payments; -but in this, as in all similar cases, the mortgage is the incident, the debt the principal and the vendor has no further interest except to the extent of the security, the mortgage affords for his debt. Subject to these rights of the vendor, the vendee has absolute control of the -property, and may dispose of it or incumber it in exactly the same manner as land -to which he has ‘the legal titlei Warvelle on Vendors (2d Ed.) § 174; Thompson v. Smith, 63 N. Y. 301 ; Peay v. Seigler et al., 48 S. C. 496, 26 S. E. 885 , 59 Am. St. Rep. 731 . And this court ‘held in a recent case that: “The vendee in possession became vested with the entire equitable estate in the real property which is the subject of the contract, and that the vendor only held and retained the legal title to the same as security for the payment of the unpaid portion of the purchase price:” State ex rel. Dillman v. Weide, 29 S. D. 109, 135 N. W. 696 .

“While the legal relations between the two contracting parties are wholly personal — things in action — equity views all these relations from a very different standpoint. In some respects and for some purposes, the contract i'S executory in equity as well as at law; but so far as the interest or estate in the land of the two parties is concerned, it is regarded as executed, and as operating *455 to transfer the estate from the vendor and to vest it m the vendee. By the terms of the contract the land ought to be conveyed to the vendee, and the purchase price ought to be transferred to the vendor; equity, therefore, regards these as done: the vendee as having acquired the property in the land, and the vendor as having acquired the property in the price. The vendee is looked upon and treated as the owner of the land; an equitable estate has vested in him commensurate with that provided for by the contract, whether in fee, for life, or for years; although the vendor remains owner of the legal estate, he holds it as a trustee for the vendee, to whom all the beneficial interest has passed, having; a lien on the land, even if in possession of the vendee, as security for any unpaid portion of the purchase money. * * * The equitable interest of the vendor is correlative with that of the vendee; his beneficial interest in the land is gone, and only the naked legal title remains, which he holds in trust for the vendee, accompanied, however, by a - lien upon the land as security when any of the purchase price remains unpaid. This lien, like every other equitable lien, is not an interest in the land, is neither a jus ad rein, nor a jus in re, but merely an incum-brance.” I Pom. Eq. (3d Ed.) § 368. And, quoting from the .the same author, 6 Pom. Eq. § 862: “The analogy of the relation arising from the contract of the sale and the mortgage relation serves equity 'again in tracing the right of the vendor to be freed from the vendee’s continuing right of specific performance, where the vendee himself will not pay the purchase money. The vendee, who corresponds to the mortgagor, failing to pay the purchase money, still has his equity of redemption; the vendor has neither his money nor the land, for he has hanging- over him the vendee’s right in equity to have the land, and has no power over the land other than that of mortgagee — i. e., to hold it as security. But, to do justice to the vendor, where the vendee fails to pay the purchase money, equity allows a foreclosure of the vendee’s right to have specific performance, analogous to the foreclosure of the mortgagor’s equity of redemption. By the decree, the vendee is ordered, within a reasonable fixed time, to pay the purchase money or to -be forever foreclosed of his equity in the contract.” This rule, applied to the case at bar, gave the vendor, Chamblin, the right to foreclose his lien upon the -property con *456 tracted to be sold whenever the vendee, Edgerton, defaulted in payment of any of the notes. The right to foreclose, 'however, was the extent of his right, and Edgerton’s equitable estate would remain intact in him until it was terminated by appropriate action by Chamblin; and this right of foreclosure existing in favor of Chamblin necessarily implies the correlative right of payment and redemption existing in favor of Edgerton, until such times as ■he had been divested of his equitable estate by such foreclosure proceedings. This being the case, Chamblin could not have ousted Edgerton of his possession, nor have maintained an action to quiet title in himself as against Edgerton; and, as Chamblin’s grantees took no better title than he had, they are not in position to maintain their causés of action set up in the answer of the defendant and in the intervener’s complaint in intervention.

[12] On the other hand, Edgerton’s grantee (the plaintiff in this action) took no greater right in the premises than he had; and it nowhere appearing that he ever paid the purchase price for the land or became possessed of the legal or equitable title thereto, plaintiff failed to establish her ownership in fee, and therefore failed to establish her cause of action.

Neither party to. the action having established his claim, it necessarily follows that the judgment and order appealed from, must be reversed, and the cause remanded for such- further action as the parties may deem appropriate.